Pound bounces from weekly lows as ‘hammer’ hints reversal

GBPUSD edged up after bottoming out at 1.3010, with a ‘hammer’ pattern signaling potential for further upside. Clearing the October 10 high of 1.3093 and the 50-DMA at 1.3099 would open the door for buyers, with resistance at 1.3113 and 1.3134.

The Pound Sterling recovers some ground against the greenback as a ‘hammer’ emerges on the daily chart and rises above 1.3050, registering gains of over 0.15%.

Goodish economic data in the UK sponsored the GBPUSD’s recovery as the economy grew around estimates. Nevertheless, a slightly hot Producer Price Index (PPI) report in the US capped the GBP’s gains.

The GBPUSD seems to have bottomed out after retreating from yearly highs of 1.3434 to a daily low of 1.3010 on October 10. A ‘hammer’ formation preceded by a downtrend hints that a reversal is possible.

Nevertheless, the pair should clear the October 10 high of 1.3093, immediately followed by the 50-day moving average (DMA) at 1.3099, so buyers could remain hopeful of higher exchange rates.

GBPUSD chart by TradingView