The British Pound (GBP) has shown strength against the US Dollar (USD) as it formed a base above the 1.2600 zone. The pair, GBP/USD, has climbed higher and is now eyeing more gains above the 1.2750 level. To understand the potential upside, let’s analyze the technical indicators.
On the 4-hour chart, GBP/USD has settled above the 1.2650 level, the 100 simple moving average (red, 4 hours), and the 200 simple moving average (green, 4 hours). Moreover, there is a major bullish flag formation with resistance near 1.2725. This pattern suggests that a break above the flag resistance could lead to a sharp increase in price.
If the bulls manage to push the pair above the flag resistance, the next key resistance is near the 1.2800 level. A close above this zone would open the doors for further upsides, with the next stop for the bulls likely to be at 1.2850. A strong bullish momentum might even push the pair towards the 1.2880 level.
Support and Downside Correction
In case there is a downside correction, it is expected that the pair would find support near the 1.2650 level. However, if the bears manage to break below this level, the next major support is at 1.2600. If the selling pressure continues, GBP/USD might test the 1.2540 level. Further losses could potentially send the pair towards the 1.2400 support.
Turning our attention to the EUR/USD pair, it is currently trading in a positive zone. The bulls are gaining momentum and soon they could aim for a move towards the 1.1200 zone.
Oil Prices and Potential Gains
Meanwhile, oil prices are also poised for potential gains. There could be a move towards the $78 level, indicating a promising outlook for oil traders.
Lastly, the Richmond Fed Manufacturing Index for December 2023 is forecasted to be -7, compared to the previous reading of -5. This data will be significant for market participants in assessing the strength of the manufacturing sector.
GBP/USD is showing signs of further gains above the 1.2750 level, with the formation of a major bullish flag pattern. Conversely, a downside correction could find support near the 1.2650 level. It will be interesting to see how the oil market and the upcoming economic data impact the progression of GBP/USD and EUR/USD in the coming days.
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