Wednesday, September 9, 2015

GBP/USD: testing territory above 200 DMA

FXStreet (Guatemala) - GBP/USD is currently trading a touch below the 1.54 handle with a high of 1.5413, above the 200 DMA and low of 1.5269.

GBP/USD has been recovering from the lows of the end of August's business sell off from above 1.5720 down to 1.5155. Essentially, despite the series of poor data in PMI's from the UK, the pound has been seen as undervalued by the bulls and has been bought-up out of oversold territory post the Black Monday turmoil.

Coupled with the flow-related news in Sterling with Japanese insurer Mitsui Sumitomo agreeing to purchase Lloyd's of London unit Amlin for GBP3.5 bln, the pound has been bolstered this week leading up to the BoE decision and minutes.

GBP/USD 4-hour upside potential

While there is a better bid tone around the pair, the Momentum indicator however, is heading lower from overbought territory, as noted by Valeria Bednarik, but looking further out, she said, "In the 4 hours chart, the technical indicators maintain a strong upward momentum, despite being in overbought territory, whilst the 20 SMA is finally turning north well below the current level, supporting additional gains on a break above the 1.5410 level."
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