GBPUSD Short-Term Channel (May 19, 2017)

Price just bounce off support and could be due for another test of resistance.

The 100 SMA is also above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, this short-term moving average lines up with the channel support, adding to its strength as a floor. However, stochastic is turning back down to suggest that another dip is possible.

Economic data from the UK has been stronger than expected this week. Headline and core CPI both beat expectations but traders had been wary of the consumer sector feeling the pinch from higher prices of goods. Jobs data still reflected upside momentum in hiring while the average earnings index and the latest retail sales figure reflected resilience among consumers.

However, the dollar made a pretty strong comeback in the latter sessions as the investigations on Trump's alleged intelligence information leak to Russia went on. Other government officials attempted to reassure that progress is still being made in terms of fiscal policy reform, leading to a bounce in US equities as well.

In terms of data, US initial jobless claims and the Philly Fed manufacturing index beat expectations. Only the CBI industrial orders expectations index is due from the UK today and there are no reports due from the US.

By Kate Curtis from Trader's Way