The 2018 trading year is finally gearing up for the GPB/USD currency cross rate. U.S. fundamental data has had little influence on this market over the past couple of weeks while UK economic data has had the same lackluster impact. Then what should you focus on for direction? Momentum and trend strength remain on the side of the Bulls in the short term. The GBP/USD Bulls are flirting with 18-month highs set back in September. Will 2018 be another positive year for the GBP? Will the USD remain on the weak side of this currency cross?
As of now, the Key Pivot level is 1.3655. Will it be Resistance? This is where the Bulls lost the edge the last time. A breach of 1.3600 should touch off more Bullish interest giving Longs another run for 1.3655. It has been a good run for the GBP/USD over the past few months especially. Trading is expected to get volatile if the market gets back into this area. We are coming off of a year-end rally that may be exhausting Bullish momentum because of the low volume holiday trade.
If the Bears cannot stop this move at 1.3655 then the upside targets could start to stretch. Fresh buying may drive the steep sloping rally towards the 1.3835 level and the 1.4079 level could most likely put a cap on any extreme Bullish surge higher. The BOE is on the slow-moving path and is not likely to do anything to disrupt a strong GBP/USD move. And there are no other fundamental reasons in the short run to think about fading the rally train. So use caution if you are a contrarian looking to Sell into strength, and watch for the key levels.
How about for the Bears? Is the forecast that bleak? The Bears in the market have opportunities too. Below the 1.3655 Key Pivot, there is not much to expect as direction narrows into a range trade. Patience is necessary for Sellers. A drop under the 1.3495 level, however, may give the Bears the trigger they need to let the air out of this rally for a while. There is Support at the 1.3450 level that is holding up the steep short-term trend higher. Most likely the GBP/USD will potentially find a floor down here, and an initial bounce should be anticipated.
Only a break under the 1.3450 price level suspends any signs of strength as the Bears show they are taking control of the trend. The 1.3375 and 1.3322 price levels could likely be the extended sell-off objectives. While a slide downward into this area would reverse the short-term trend, it only puts the medium to long-term trend on hold. With Brexit still, a factor who knows how the fundamentals will pan out yet into the 2018 trading year. GBP/USD traders will have many variables to take into consideration ahead. Unfortunately, there will be more speculation when it comes to forecasting this currency market. The politics involved between the UK and the EU seem to just be locked in too many stalemate situations.