GBP/USD has rebounded since 16th January, trading above the downside short-term major uptrend line support.
However, the bullish momentum has waned since early February, as a result of the strengthening of the dollar.
On Tuesday 14th Feb, the uptrend line support was broken after the Fed Chair Yellen’s hawkish testimony. The support has turned into the near-term major resistance.
The price is currently trading below the major resistance zone where the two resistances converge: the uptrend line and the key level at 1.2500. The selling pressure is heavier at this zone.
On the daily chart, the 10 SMA is crossing over the 20 SMA downward, suggesting increased bearish momentum.
The 4 hourly Stochastic Oscillator is above 70, suggesting a retracement.
The resistance level is at 1.2470, followed by 1.2485 and 1.2500.
The support line is at 1.2445, followed by 1.2420 and 1.2400.
We will see the release of the US housing market data for January, to be released this afternoon at 13:30 GMT. It will be accompanied by the US Initial Jobless Claims (the week ended on 10th Feb). The readings will likely influence the strength of the dollar and the movements of the dollar crosses.
With better-than-expected numbers, it will likely weigh on GBP/USD and test supports.
With lower-than-expected numbers, it will likely push GBP/USD up and test resistances.
Furthermore, keep an eye on the UK retail sales and core retail sales figures (YoY and MoM) for January, to be released at 09:30 GMT on Friday 17th February. It will also likely influence the strength of Sterling and the movement of GBP/USD.