After soaring over 200 pips on the day the GBP/USD has started to settle into a tight range after failing to break above technical resistance. A looming threat of additional quantitative easing may further upside potential. However, improving conditions have lessened the threat which is providing support.
Key Technical Levels
The 50-Day SMA at 1.6281 has slowed sterling gains and is now forming the upper bound of the current range The GBP/USD has traded between 1.6215 and the technical level providing an ideal environment for scalpers. Short covering and increasing optimism over the U.K. economy may continue to provide support. Additionally, the 100-Day SMA sits just above at 1.6351 which may cap any potential breakout to the upside.
Quantitative Metrics
A narrowing Bollinger band and a low ATR adds to the GBP/USD’s attractiveness fro scalping strategies. An implied volatility of 12.25 is in the lower range and enhances the case for the pair. However, we have seen the ATR turn up on recent volatility and the Bollinger Band width is one of the largest of the pairs listed below which are certain red flags.
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