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Sterling gains as bulls remain in charge

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The Pound Sterling began the week solidly against the US Dollar, registering modest gains of 0.04% after hitting a daily low of 1.2681, with the GBPUSD trading later in the day at 1.2703.

Last week, the GBPUSD pair edged toward the current exchange rate, clearing stir resistance levels like the 50 and 100-day moving averages (DMAs), which opened the door for further gains. Although momentum backs buyers, as depicted by the Relative Strength Index (RSI), downside risks remain.

For a bullish continuation, the GBPUSD must remain above 1.2700. In that event, the first resistance would be the March 21 cycle high at 1.2803. Once surpassed, sellers’ next line of defense would be the year-to-date high at 1.2893, ahead of 1.2900, followed by the psychological 1.3000 mark.

Conversely, if sellers drag the GBP/USD spot price below 1.2700, that could exacerbate a retest of the confluence of the 100-DMA and the May 3 high at 1.2634. Further losses lie below the latter, which would expose 1.2594 and the 50-DMA at 1.2584 before dipping to the 200-DMA at 1.2539.

GBPUSD – Daily Chart by TradingView

(Source: OANDA)