GBP/USD breaks above the 1.3200 handle
The spike to the upside touched 1.3215 and that’s the highest level the pair has traded since 17 July. Right now, there is minor resistance to come from the 26 July high @ 1.3213 but in from a technical perspective this will look more like a speed bump if buyers can sustain a break above the 100-day MA (red line) @ 1.3165 now.
While the data isn’t going to be a game changer in terms of what it means for the BOE this year and moving into next year, it’s certainly the catalyst that pound buyers were looking for to generate further gains in the quid against the dollar.
With cable already resting on the 100-day MA earlier in the day, the positive data release is proving to be enough of a reason for buyers to go with the key technical break. I’m trying to find reasons to fade the spike higher here but I can’t come up with any really.
The only thing that will stop a move higher in cable now will be negative Brexit headlines to come from Salzburg. But in my view, with no formal conclusions to come, chances are we’ll be getting a more positive spin to things ahead of October. And even then, if there are no formal conclusions, any negative comments won’t weigh as badly since they are not set in stone just yet.
And with the pound looking perky, it argues for a favourable upside trade in cable now. Hold above the 100-day MA and the bearish bias that has persisted for five months will be broken. And hold above 1.3200, I would argue that price momentum is starting to turn more bullish.
Apart from that, there is the upwards trendline resistance (on the hourly chart above) that will also be a resistance point for cable buyers at the moment. But the key thing is all about that 100-day MA if you ask me. Break above that and the bullish run to the upside will extend higher – barring any Brexit headline surprises.