Image © Daniel Sky Photo, Adobe Stock
- GBP/USD remains in an intact uptrend
- Stays above 1.30 and trendline
- Potential for continuation higher to 1.3350 and 1.3600
The Pound-to-Dollar exchange rate is likely to remain in an uptrend and be underpinned by strength as the next vote on Brexit probably sees Parliament delay article 50 - kicking the can of Brexit down the road.
“There is another vote in Parliament which is likely to again be a cause of elevated volatility today, but also likely to underpin Sterling for a softer Brexit and subsequently help to lift Cable,” says Richard Perry, a market analyst with Hantec Markets.
The overall market structure for Sterling-Dollar is meanwhile said to remain favourable to bulls of the currency, according to analysis by LMAX Exchange.
“It is important to note that despite the recent setbacks in the Pound, the market has been constructive overall, since putting in those lows we saw several weeks back. Overall it actually looks like the market is actually trending higher,” says a note from LMAX Exchange's dealing desk.
Image courtesy of Hantec Markets.
The pair has remained above the key 1.30 level and has kept above a key trendline drawn from the January lows. These are overall bullish indicators.
LMAX Exchange also notes how GBP/USD has remained elevated above the Ichimoku cloud - a Japanese chart innovation which helps identify the direction of the trend - on the daily chart, finding support from the top of the cloud repeatedly on pullbacks.
“This point is highlighted even further when we look at the Ichimoku cloud on the daily chart, a trend indicator. We can see that the latest round of setbacks was also well supported by the cloud to keep the market in an uptrend. And we will look for the same to hold true into this recent round of setbacks, and for the market to hold up. Ultimately, if the market can hold up above the bottom of the cloud then we continue to see a constructive outlook with dips viewed as corrective,” say LMAX Exchange.
On a long-term basis, the GBP/USD exchange rate also shows potential to move considerably higher.
“On a medium-to-longer-term basis, we see risks of the formation of a higher low - a meaningful higher low - in that 2019 above the plus 30-year low in 2016. Ahead of the next major upside extension within a longer-term developing uptrend,” says LMAX.
A break above the 1.3350 highs would provide strong confirmation of an extension of the uptrend. Such a break would probably open the way to a move all the way up to 1.3600, where the 200-week moving average (MA) is situated. This is also the usual estimate for the level cable would probably achieve should there be a soft Brexit.
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