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GBP/USD Could Rally If It Breaks 1.3800

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Aayush Jindal

Key Highlights

  • GBP/USD started an upside correction above 1.3700 and 1.3720.
  • It is facing a crucial bearish trend line with resistance near 1.3780 on the 4-hours chart.
  • EUR/USD is consolidating gains near the 1.1800 region.
  • Gold price is trading above $1,800, while crude oil price is still below $70.00.

GBP/USD Technical Analysis

The British Pound formed a base above the 1.3600 zone against the US Dollar. GBP/USD started a fresh increase and it broke the key 1.3700 resistance zone.

Looking at the 4-hours chart, the pair was able to climb above the 1.3720 resistance zone. There was a break above the 50% Fib retracement level of the downward move from the 1.3878 swing high to 1.3602 swing low.

It is now facing a crucial bearish trend line with resistance near 1.3780 on the same chart. The 61.8% Fib retracement level of the downward move from the 1.3878 swing high to 1.3602 swing low is also near the trend line resistance.

Moreover, the 100 simple moving average (red, 4-hours) coincides with the trend line. The next key resistance is near the 1.3800 zone the 200 simple moving average (green, 4-hours).

There was a close above the 1.3800 zone could start a fresh increase. The next major resistance is near the 1.3850 level. Any more gains could lead the pair towards the 1.3940 resistance region.

On the downside, an initial support is near the 1.3740 level. The main support is now forming near 1.3700. A close below the 1.3700 level might open the doors for more losses. The next major support is near the 1.3620 level.

Looking at EUR/USD, the pair was able to climb above the 1.1800 resistance zone and it is currently consolidating gains.

Economic Releases

  • Germany’s Unemployment Change for August 2021 - Forecast -34K, versus -91K previous.
  • Germany’s Unemployment Rate for August 2021 – Forecast 5.6%, versus 5.7% previous.
  • Euro Zone CPI for August 2021 (YoY, Preliminary) - Forecast +2.8%, versus +2.1% previous.
  • Canadian Gross Domestic Product for Q2 2021 (Annualized) – Forecast +2.5%, versus 5.6% previous.
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