On the 6th of October the British Pound spiked downward against the USD and other currencies, as news circulated momentarily that the UK government was set to walk away from negotiations regarding the Brexit. However, diplomacy has supposedly prevailed and murmurs are being published which indicates Britain and the European Union might be able to frame a patchwork agreement.
After stumbling to lows on Tuesday of nearly 1.28640 the GBP/USD was able to display a reversal upwards briefly, but yesterday also saw downward momentum generated and a new low of approximately 1.28510 established. However, since yesterday’s important test of support levels, the GBP/USD has managed to find a foundation of bullish buying come into vogue. This morning the forex pair is near the vicinity of 1.29500 and it is on the precipice of challenging a price action range which saw it begin to target the 1.30000 resistance target this past Monday.
Risk appetite in the global markets has appeared energized the past day and early indications from the US suggest another positive day may be in store via investor sentiment. Before stumbling on the 1st of September the GBP/USD was trading near the 1.34700 level. Not to suggest the GBP/USD is about to mount an attack on this value near term, but the forex pair does have an adequate amount of technical space to traverse if it can sustain momentum higher.
From the 30th of July until the last week of August the GBP/USD traded essentially within a range of 1.29300 to 1.32700 and this price band may be a realistic perspective for speculators to be focused on if risk appetite and Brexit news can remain calm. Buying the GBP/USD looks appealing within a price range of 1.29400 to 1.295000 for traders who want to be patient and see a slight retracement off of short term highs which have been established this morning.
If a speculator wants to enter a buying position now with a market position they should use solid risk management to guard against sudden surprises. However, short term the GBP/USD does have an alluring risk reward scenario landscape. Technically it appears there is more room to advance higher compared to a limited downward capability.
GBP/USD Short Term Outlook:
Current Resistance: 1.29630
Current Support: 1.29290
High Target: 1.29950
Low Target: 1.29030
