- A modest USD pullback helped GBP / USD regain positive traction on Monday.
- The momentum pushed the pair to resistance marked by the 61.8% Fibonacci level.
- The RSI on the hourly charts warrants some caution before placing aggressive bull bets.
Intraday USD selling accelerated ahead of the North American session and pushed the pair GBP/USD to fresh two-week highs around the 1.3875-80 region in the past hour.
A sustained move past the 1.3830-35 confluence hurdle was seen as a key trigger that sparked some technical buying. The aforementioned area comprises the 100-period SMA on the 4-hour chart and the 38.2% Fibonacci level of the recent bearish leg of 1.4002-1.3671, which should now act as a fundamental point for short-term traders.
The GBP / USD pair was last seen near the 61.8% Fibonacci level and a sustained move beyond will set the stage for an extension of the recent bounce from multi-week lows. The constructive outlook is reinforced by the fact that the technical indicators on the daily chart have only just started to move into positive territory.
That said, the RSI (14) on the hourly charts has moved on the verge of entering the overbought zone and deserves some caution before positioning for any further appreciation moves. Market participants are now expecting the US ISM Services PMI to seize some short-term business opportunities amid tight liquidity conditions.
Meanwhile, some subsequent purchases have the potential to lift GBP / USD beyond 1.3900, to test the next big hurdle near the 1.3965 offer zone. The momentum could extend further and help the bulls point back to regain the 1.4000 mark, levels not seen since March 18.
On the other hand, the aforementioned confluence resistance breaking point, around the 1.3830-35 region, now appears to protect the immediate downside. Failure to defend the aforementioned support could lead to some technical selling and make GBP / USD vulnerable to accelerate the decline to the 38.2% Fibonacci level around 1.3800.
4 hour chart
Technical levels
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