- GBP / USD joined the strong bullish move overnight and gained traction for the second day in a row.
- The intraday rally stalled near resistance marked by the upper end of an uptrend channel.
- The setup appears to be in favor of bullish traders and supports the prospects for an eventual breakout.
The pair GBP/USD it spiked to fresh three-month highs during the middle of the European session, although it rapidly declined a few pips thereafter. The pair was last seen trading just below 1.4200, almost unchanged for the day.
Following a brief consolidation during the early part of trading action on Friday, the pair turned positive for the second session in a row and was based on the strong bullish move overnight. The US dollar struggled to gain significant traction and languished near multi-month lows. This, coupled with the mostly upbeat macroeconomic data from the UK, provided a modest rise to the GBP / USD pair.
Looking at the technical outlook, the intraday rally stalled near resistance marked by the upper limit of a short-term rising channel extending from lows in March and April. The aforementioned barrier, currently around the 1.4235 region, coincides with the annual highs hit on February 24. This, in turn, should now act as a key point for short-term traders.
Meanwhile, the technical indicators on the daily chart maintained their bullish bias and are still far from being in overbought territory. The technical setup appears firmly tilted in favor of bullish traders and supports the prospects for an eventual breakout to the upside. With that said, the bulls could still wait for a sustained move beyond the 1.4235 area before placing new bets.
The GBP / USD pair could then aim to regain the 1.4300 level and prolong the upward trajectory further towards the 2018 annual highs around the 1.4375 region.
On the other hand, the daily swing lows, around the 1.4170-65 region, now appear to protect the immediate downside. Sustained weakness below could make GBP / USD vulnerable to accelerate the slide towards the 1.4100 level. This is followed by weekly lows, around the 1.4075 region, which if broken will negate the constructive outlook and trigger some technical selling.
Daily chart
Technical levels
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