The British pound has been trapped in a two-hundred and fifty point trading range against the US dollar since mid-October, as Brexit uncertainty and UK political drama continues to unfold.
The GBP/USD pair has been exhibiting increasing bullish price-action, with traders quickly buying dips in price towards the 1.2800 level. A range break above the 1.3000 level may be on the horizon in December.
GBP/USD medium-term price trend
The technicals towards the GBP/USD are increasingly bullish over the medium-term horizon. Sterling has now spent over 30-day above its 200-day moving average and seven weeks above its 52-week moving average.
A range breakout above the 1.3000 level should spark a wave of fresh technical buying, eventually pushing the GBP/USD pair towards the 1.3200 level.
Extended resistance above the 1.3200 level is currently found at the GBP/USD pair’s 12- month moving average, at the 1.3300 level. The 12-month moving average is extremely important, as the pair has capped been below this key technical metric since November 2014.
Looking at the downside potential for the GBP/USD pair over the medium-term, only a sustained break below the 1.2750 level would cause medium-term traders to turn bearish. Multiple daily price closes below the 1.2770 level would signal a negative technical shift in the GBP/USD pair.
GBP/USD short-term price trend
The GBP/USD pair recently closed the week above the 1.2900 level, further signaling bulls intention to test towards the November monthly price, around the 1.2988 level.
The four-hour time frame shows that short-term bulls are fully in control of the GBP/USD pair while price trades above the 1.2890 level. Sterling is also supported by four bullish higher price lows across the four-hour time frame.
Dips towards the 1.2890 level this week would likely be seen as buying opportunity by traders who are bullish towards the GBP/USD pair in the short-term.
Any moves below the 1.2880 level can expect to find strong support between the 1.2860 to 1.2840 levels.
It is also noteworthy that the US dollar index is trading towards the top of its price range, and should be closely monitored as a rejection or breakout from current levels could have a strong impact on GBP/USD short-term directional movement.
GBP/USD technical summary
Traders are likely to turn increasingly bullish towards the GBP/USD pair in the short and medium-term if a range break above the 1.3000 level occurs this month. The 1.3200 resistance area appears to be the overall upside objective, although an extension towards the 1.3300 level is possible.
Short-term analysis suggests that traders have few reasons to bearish towards the GBP/USD pair while price trades above the 1.2890 level.