GBPUSD recently broke past the resistance at the 1.5650-.1.5700 psychological levels and is showing signs of a pullback from the rally. 

The Fib tool appliced on the swing low and high on the 4-hour chart shows that the 38.2% to 50% retracement levels line up with the broken resistance, which might now hold as support.

Stochastic is still on the way down, which means that sellers are in control of price action and that a large retracement might be possible. Note that the moving averages are closer to the 50% to 61.8% retracement levels, which might be the line in the sand for any correction. RSI is also indicating bearish pressure.

A bounce off the Fibonacci retracement levels could allow the uptrend to resume, possibly allowing GBPUSD to test the previous highs around the 1.5830 area or move beyond that level. On the other hand, a break below the 61.8% Fib and a downward SMA crossover could suggest that a reversal is in order.

There have been no reports released from the UK economy yesterday while the US printed mixed data. CB consumer confidence came in better than expected, as the index jumped from 91.0 to 101.5 while new home sales fell short of expectations but still indicated a gain from 481K to 507K.

UK BBA mortgage approvals and CBI realized sales data are due today and the former is expected to show an improvement while the latter could show a decline from 21 to 19. As for the US, durable goods orders data are due, with the headline figure slated to show a 0.4% decline and the core figure likely to show a 0.3% uptick.

Stronger than expected data from the UK and weak figures from the US could set the stage for a strong GBPUSD rally, as this might remind traders that the Fed isn’t likely to hike interest rates by September. FOMC member Dudley is also set to give a testimony today.

By Kate Curtis from Trader’s Way