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GBPUSD Countertrend Play (Jun 30, 2017)

The ascending channel on Cable's daily time frame is still intact and price is heading towards the resistance around 1.3400.

A countertrend opportunity could arise if reversal candlesticks form around this area. In that case, a move back to support at the 1.2900 area could take place. 

The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is to the upside. Also, the moving averages are close to the channel support, adding to its strength as a floor. Stochastic is heading up to indicate the presence of buying pressure. 

Hawkish remarks from a few BOE officials have shored up the pound in the past few days, along with the lack of negative Brexit updates. Even Governor Carney acknowledged that removal of stimulus could be necessary if inflationary pressures continue to dampen consumer spending. 

As for the dollar, weaker expectations that the Trump administration could follow through on its reform agenda has weighed on the currency. The next rate hike isn't due until the fourth quarter of the year so some dollar weakness could be in the cards in the next few months.

510 170630_gbpusd

Of course Brexit risks remain and there's always a good chance that tensions during talks could dampen demand for the UK currency. Low liquidity during the summer months could make this pair more sensitive to headlines. 

By Kate Curtis from Trader's Way

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Instrument Bid Ask Spread
Instrument Bid Ask Spread
Instrument Bid Ask Spread

2023 Martin Luther King Holiday Schedule

Due to the Martin King Holiday on 16 January, 2023, market activity and liquidity may be lower than usual....

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