GBPUSD Channel Top (Jan 23, 2018)

This could provide a countertrend opportunity for a pullback to the channel support or at least until the mid-channel area of interest.

The 100 SMA is above the longer-term 200 SMA on this time frame, so the path of least resistance is to the upside. This means that price could still make a strong break past the channel resistance and start a steeper uptrend.

However, stochastic is already indicating overbought conditions, so bulls must be exhausted. If selling pressure takes over, a pullback could be underway until the 1.3500 levels.

Brexit updates have mostly been bullish for the pound as the government is making more progress in drafting its transition plans. Data from the UK last week has mostly disappointed and this week has the jobs report due.

Analysts expect a lower claimant count change of 2.3K compared to the earlier 5.9K increase in joblessness. The unemployment rate could hold steady at 4.3% while the average earnings index could also stay at 2.5%. Stronger than expected results could lead to expectations of upbeat consumer spending and inflation numbers down the line.

As for the dollar, the currency barely drew support from news that the US government shutdown is over. Risk appetite is keeping a lid on the safe-haven currency's gains for now and there are no major reports due next.

By Kate Curtis from Trader's Way