Top-tier reports scheduled in the U.K. this week are giving us a chance to take a closer look at GBP/USD’s uptrend.
As you can see, Cable has come a long way from its 1.1800 lows in early March. In fact, GBP/USD even started trading inside an observable ascending channel about a month ago.
Before you check out the setup, make sure you know all of last week’s major market movers as well as this week’s potential market catalysts!
GBP/USD: 1-hour
This week, GBP/USD opened around the 1.2400 area that lines up with key resistance zones in late December and late January.
Coincidentally, 1.2400 also marks the bottom of the channel on the 1-hour time frame.
Are we looking at a good chance to jump in the uptrend?
Technical analysis currently favors the bulls as Stochastic hangs out in the oversold area while forming a bullish divergence against GBP/USD’s prices.
Focus on risk-taking and a Fed pivot could also boost GBP/USD enough to bounce from 1.2400 all the way to the 1.2500 psychological level or even the 1.2545 April highs.
But appetite for GBP could also depend on U.K. inflation and labor market economic indicators scheduled this week.
Consumer prices are expected to edge down from their double-digit acceleration while official wage data may suggest that wage inflation has peaked.
A less hawkish BOE would make it easier for GBP/USD traders to favor USD in risk-averse trading conditions. Then again, currency traders could find relief from positive U.K. reports and extend GBP/USD’s 1-hour uptrend.
For now, I’m taking cues from last week’s risk-friendly trading environment and starting scaling in for a trend continuation.
A long trade at the first signs of a bounce would yield a good risk ratio with 1.2500 as initial profit targets and the 1.2600 and 1.2650 previous inflection points as longer-term goals.
