Will GBP/USD Break 1.23?

Will GBP/USD Break 1.23?

Will GBP/USD Break 1.23?

For the first time in 6 trading days, the British pound rallied against the U.S. dollar. Although loans for house purchases increased, the move had more to do with Bank of England governor Carney’s comments yesterday and the short covering that it induced. With that in mind, gains have still been capped at 1.2250. BBA Loans for House Purchase rose 38,252 in the month of September up from 37,241 in August. Low interest rates continue to support housing market activity and that is a welcome development post Brexit. For the time being, GBP/USD remains confined to a 200-pip range but that could change tomorrow. Sterling will be in focus with Q3 GDP numbers scheduled for release. Economists are looking for a dramatic slowdown in growth courtesy of Brexit but retail sales have been strong so growth may not slow as much as they fear and if they beat expectations, we could see a sharp rise in GBP/USD.

Technically, GBP/USD is at an important juncture. If it continues to hold below 1.2250, a move back to 1.22 becomes likely. If it breaks 1.2250 then there’s no stopping the pair until the October 19 highs near 1.2330.

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