Despite the current bad news anticipation for the GBP, it still finds a way of proofing skeptics wrong and outperforming. Today UK GDP results came in at 2.3% annualized growth and quarterly improvement of 0.5% up from June’s quarter of a 0.7% increase. But really, since after Brexit and the resultant easing and increase of asset purchases, the pound took a 15% depreciation yes but the fundamentals have been shouting for a UK recovery. Look at how CPI, manufacturing, Current account, Claimant count changes and most importantly Earnings have been. It has been stellar and supportive of the GBP but then looking at the chart, there have been buying pressure after the mini flash and then accumulation as the GBP is bought while prices remains flat and making a series of higher highs relative to the lower BB.
From my analysis, there was a tremendous GBP demand on 07.10.2016 and was accompanied by a sell off the next day as more and more traders jumped in and then it halted at that 31 years lows and moved horizontally. The daily chart stochastics is in overbought territory and right now immediate resistance comes in at the 20 day moving average. In my opinion, any break above this flexible resistance will take us up to the first level of resistance at 1.28 before trend up again in the coming weeks. Price action seems to be in the last Elliot wave also if you analyze this from the first wave down that begun on June 2014.
For now, we exercise patience as price action is not that rewarding in the lower time frame with 50-80 pip range movements at the end of the day.
Otherwise, have a good trading day.