The GBPUSD had a bearish momentum this week, after hit 10 months high since November 2008 on August 05 2009 at 1.7042, forming a minor bearish channel (red channel) as you can see on daily chart below. The daily chart below also revealsÂ that after had some significant bullish rally since March 11 from 1.3653 to 1.0742, the pair is now at a critical technical point, struggling around the trendline support (blue) and 23.6% Fibo retracement of 1.3653 â€“ 1.7042 around 1.6250 area (yellow). I am expecting a significant movement in upcoming week, whetherÂ we will have further bearish correction or bullish continuation. A clear break below the trendline and consistent move below 1.6250 should trigger further bearish momentum towards 1.5750 area (38,2% Fibo). But if the trendline support hold and price fail to consistently move above 1.6250 area, we could have bullish momentum back to the upside at least towards 1.6490 area. CCI in oversold area and about to cross the -100 line up on daily chart suggesting potential upside rebound.
I prefer a bearish scenario on the facts that UK’s economy outlook remains weak and pessimistic and there are not enough strong UK’s economy datas to support the Sterling. The BoE decision to expand the quantitative easing program also could hurt the Sterling. So, even if the trendline support hold in upcoming week, I think GBPUSD bullish momentum should be very limited. Have a great weekend and see you guys next week