GBPUSD buying opportunity | 18 Nov 2022

The rapid price increase last Thursday following weaker than expected US inflation data began to hesitate as it approached the psychological barrier at 1.18000, which coincides with the 61.8% Fibonacci level. However, hot CPI and average earnings data released on Tuesday which together indicate tightening inflationary pressure in the UK economy finally gave prices the boost needed to break above the resistance turned support level. Prices came back to test the 1.18000 support level again on Thursday following the UK government’s announcement of austerity measures to control inflation, but failed to break through after a £26 billion support package was announced later in the day. Given the weakening Dollar and overheating UK economy, we forecast an extension of the bullish trend where prices will bounce to the next resistance zone at 1.22800, coinciding with the 78.6% Fibonacci extension level. Prices are lying above the Ichimoku cloud as well, supporting our bullish bias.