GBPUSD about to cancel bearish trend
07 January 2022
The Pound has been stuck within a bearish channel for the past six months. However, it looks like it is about to break free from that channel to the upside, likely canceling the medium-term bearish trend.
Despite soaring US yields and hawkish Fed, the USD has failed to book any gains against sterling, possibly leading to another leg higher once the channel is broken.
In the UK, Halifax showed that house prices rose in December at the fastest annual pace since July 2007 amid strong demand and low supply but are expected to slow in 2022. Prices rose 9.8% year-on-year after an 8.2% increase in November.
The monthly gauge showed a 1.1% price increase in December, in line with the previous month, with the average property price now standing at a new record high of 276,091 GBP.
Later today, the US labor market data are due, with the non-farm payrolls change expected to double to 400,000 for December. In addition, the unemployment rate will likely fall a notch to 4.1%. As a result, volatility will probably be elevated after the data.
Should the GBPUSD pair rise above the bearish channel, the next resistance will be at 1.36. If bulls push the Pound above 1.36, we could see a rally targeting the 200-day moving average (the green line) at 1.3735.
Alternatively, a decline from the current level could drag the pair toward the 50-day moving average near 1.34 (the purple line).