"While the near-term landscape argues for some volatility, we think the chances for GBPUSD to squeeze meaningfully higher are limited." – TD Securities (based on PoundSterlingLive)
On Tuesday the GBP/USD pair experienced the strongest rally in almost 20 years, amid UK May's comments and upbeat UK inflation data. Having surged 363 pips, the Cable fully realised the falling wedge pattern, as its upper trend-line was pierced yesterday.
Moreover, the 1.24 major level was retaken, with the 55-day SMA managing to provide sufficient resistance to limit the gains. The same SMA keeps providing resistance today, also being bolstered by the Bollinger band, the monthly PP and the weekly R2, which altogether are likely to cause the Pound to undergo a bearish correction.
The weekly R1 at 1.2324 is the closest support, which is expected to limit the possible losses.
Today 72% of traders are long the Pound (previously 73%), whereas 52% of all pending orders are to sell the Sterling, up from 50%.
Provided by Dukascopy Bank