British Pound Continues Its March To The Upside Against The US Dollar

GBP/USD has been consolidating Friday, with a higher bias.  The UK GDP did come out today and it showed that growth declined by 1.9% for the quarter which was as expected. The decline was led by a 3.8% fall in Gross Fixed Capital Formation and a -1.2% decline in Private Consumption.

The GBP/USD did have a move lower in the London session but quickly rebounded higher.  The move down is indicative of the skittishness in the market - especially in light of the shot across the bow by S&P yesterday regarding the possible debt downgrade. The hope remains that the bottom is in place, however.

The pair is higher on the day and continues its march to the upside. The price has closed higher each day this week.  The price has been above the 100 hour moving average since the 1.5197 level.  The current 100 hour moving average comes in at 1.5613 currently.

From a longer term technical perspective, the GBP/USD is correcting from the move down from the 2007 high of 2.1160 to the low of 1.3502 (see daily chart below)    The 38.2% retracement of that move, will bring the target level up to around the 1.6425 area.  This is a longer term projection and is dependent on the price action in the shorter end.  Clearly, staying above the 100 hour moving average (blue line in the chart above and currently at the 1.5613 level) will need to be maintained.  Staying above the 200 day moving average (green line in the daily chart below which is currently at the 1.5565 level) is also a key prerequisite to the continued move higher.

If this can be maintained, the upside bias remains firmly in place.

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