GBP/USD: is Bull season upon us thanks to Boris Johnson?
Hello Traders and welcome back to EverythingFX! Not only could we witness the hottest day in the UK with temperatures soaring to 39 degrees, but we may also be seeing strength in GBP finally!
The Great British Pound is currently trading at 1.24883 against the US Dollar during today's London session.
Taking a look at Cable on the higher timeframes we can see the market has been going sideways for quite some time now in and around our level of monthly support at 1.25000.
On the daily timeframe, it is clear that we are in a descending wedge as well as having printed a right shoulder forming an inverse head and shoulders in and around 1.24300. On the daily closure yesterday we did have an inverted hammer engulfing the prior day's candle with potentially giving us the momentum to follow through.
On a 4-hour timeframe, we have seen a breakout to the upside however we need a break of 1.25000 to sustain bullish momentum. Our upside target is 1.27500 which is inevitably our upside target at our next level of resistance. What would invalidate this bias for me right now is a daily closure below 1.24000 which would require further evaluation.
Fundamentally, Brexit remains centre stage with the UK having a newly elected Prime Minister, Boris Johnson, which is eagerly anticipating the 31st of Oct as he has come out to comment saying that we will be leaving the EU regardless. Traders are now pricing in his enthusiasm to get a deal with the EU but only time will tell how the EU react to this approach. We have also seen a newly elected cabinet of leaders to be working under Boris's wing adding to the overall Pound optimism. We have Initial Jobless Claims out in the US today at 13:30 GMT which has a consensus of 220K, so overall not much change there. With the US Fed looking to cut interest rates very soon that could be the push we need to have a new leg to the upside on Cable. Stay tuned to our market news section as well as our social media's for further updates.