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The GBP/USD exchange rate is trading 0.35% higher at 1.2612 in the midweek trading session but analyst and technical forecaster Richard Perry of Hantec Markets says there is only a mild positive bias within the medium term range now.
The outlook for GBP/USD has become somewhat mixed in recent sessions.
With the recent rally failing at $1.2670, under the resistance of the falling seven month downtrend (today at $1.2680), the fear would be that the near term recovery would begin to retrace back within the medium term range once more.
This could still be yet to play out, however, the bulls fought back yesterday into the close and are pulling GBP/USD higher once more today.
This has left a low and support at $1.2480 (above the $1.2435 support) and back above the $1.2540 old near term base neckline.
Taking a step back to assess the indicators, we see only a mild positive bias within the medium term range now.
RSI is fairly steady in the mid-50s, with MACD lines flattened a shade above neutral. Cable is also trading within a bunch of flat moving averages.
This all points to a lack of trend and a market that is likely to throw up mixed signals in the days ahead.
It points to a period of difficult trading, false moves and lacking conviction. A closing breakout above $1.2670 would encourage the bulls, whilst below $1.2435 would be disappointing now.
GBP/USD Finds Relief on Market Rebound
Once more the daily see-saw of risk appetite has taken affect as sentiment picks up again.
Could it be that this time drives a decisive move?
The swing back to positive risk has been driven by the results of a COVID-19 vaccine by US pharma company Moderna.
Results were “robust” with antibodies present in all 45 test subjects.
The development of a reliable vaccine is the key to opening the door to a serious recovery for markets and traders will need to assess the implications of these results.
Previous positive vaccine results have seen risk appetite peter out quickly in recent months. It is interesting to see that there was a decisive swing higher on Wall Street, that is continuing on futures today.
The US dollar is under pressure across the major currency pairs. Higher beta majors are performing well.
Is this move set to break markets out of their month long consolidations? There have been some early calendar events that could also forge moves today.
As expected, the Bank of Japan sat on its hands for its monetary policy decision, with no shift on rates or its yield curve control.
However, UK inflation has ticked higher than expected (on both core and headline) leading to an uptick on sterling today.
For later today, the survey data from the New York Fed could give an early insight into July and will be an interesting watch.