GBP/USD rallied on Wednesday, breaking above the key psychological barrier of 1.3000, which acted as the upper bound of the sideways range that was containing the price action since October 16th. Now, the rate is trading at levels last seen in May 8th, with the bulls probably aiming for the high of that day, at around 1.3080. In our view, the upside exit of the sideways range has turned the near-term outlook back to positive.
If the bulls are strong enough to reach and breach the 1.3080 zone, we may then see extensions towards the 1.3175 territory, marked by the high of May 3rd. The rate could stall there for a while and it could even retreat somewhat. But as long as it stays above 1.3000, we would see decent chances for another leg higher and another test near the 1.3175 area. If that zone is broken this time around, then we could see the rate advancing toward the high of March 27th, at around 1.3270.
Shifting attention to our short-term oscillators, we see that the RSI lies above 70 and points up, while the MACD stands above both its zero and trigger lines, pointing north as well. Both indicators detect upside speed and support the notion for Cable to keep climbing higher for a while more.
On the downside, a slide back below 1.2950 may signal the rate’s return within the pre-mentioned range. We could then see declines towards the low of November 29th, near 1.2875, the break of which may extend the slide towards 1.2830, or even the lower end of the range, at around 1.2770.