GBP/USD Daily Forecast – Sterling Gains Upward Momentum After Reversing Near Recent Lows

GBP/USD Posts a Reversal Candle on a 4-Hour Chart

GBP/USD buyers triggered a turn higher in the exchange rate from the 1.2835 area in early trading on Wednesday. This is an area that has held buyers three times now over the last week.

High street lending out of the UK was reported to come in softer than expected with 41,200 new mortgages approved in October versus an expected 43,100. The data didn’t differ a great deal from prior readings and did not have a sustained impact on the exchange rate.

Polling data this week has shown a slight decline in the lead held by the Conservative party although they maintain an 11 point lead over Labour. At 22:00 GMT today, YouGov will release its MRP poll. This is poll will be widely watched as it correctly predicated in 2017 that Theresa May would lose her majority. Also of importance is that the polls released earlier in the week were based on interviewing roughly 100 people. The MRP poll reflects a much wider audience of 50,000 people.

Technical Analysis

The technical outlook points to more upward potential for GBP/USD when considering the strong bullish print on a 4-hour chart. However, knowing that the YouGov poll will be released later today, things can easily change things and the poll will likely trump any technical developments.

In the short-term, the pair stands to extend gains. But ultimately the poll results will tend to influence the exchange rate.

In the early week, the 50 moving average on a 4-hour chart was responsible for holding the pair lower. I think this remains a critical overhead level. It continues to hold near a horizontal level at 1.2904.

Considering the Thanksgiving holiday this week, it seems unlikely that the pair will see a sustained move in either direction. For that reason, I think traders will continue to fade extreme moves and keep the pair within the broader range it has traded in since late October.

Bottom Line

• GBP/USD is gaining upward momentum.
• YouGov will release their MRP poll later today and a volatile reaction seems likely.
• Critical near-term resistance for the pair is found at 1.2904.