GBP/USD Forecast: No Signs Of Topping Out Despite Hawkish Fed View

In the immediate aftermath of the FOMC policy announcement on Wednesday, the GBP/USD pair printed fresh YTD highs but quickly reversed over 100-pips after the Fed outlined a plan on unwinding its massive $4.5 trillion balance sheet. The US Dollar rallied hard in wake of hawkish policy statement, which suggested scope for another rate hike in 2017 and would be followed by three more hikes in 2018.

The major touched an intraday low near mid-1.3400s but managed to bounce off lows and was being supported by growing expectations for the BoE rate hike action in November. This coupled with Wednesday's stellar UK retail sales data also underpinned the British Pound and helped limit deeper losses.

The pair has now recovered back closer to the key 1.35 psychological mark and remained within familiar trading range as market participants now look forward to second-tier economic releases for some impetus. Today's economic docket features the release of UK Mortgage Approvals and Public Sector Net Borrowing figure, while from the US usual weekly jobless claims and Philly Fed manufacturing index are due for release later during the NA session.

From a technical perspective, the pair has still not shown any signs of topping out and remains poised to extend its near-term strong bullish trajectory. This week’s two-way price action could be categorized as consolidation phase and with short-term technical indicators cooling off from extremely overbought conditions, the pair seems more likely to eventually resume with its prior appreciating move.

Having said that, a decisive break below a short-term ascending trend-channel resistance break-point, now turned immediate strong support near the 1.3440-30 region, would negate the bullish bias and trigger a near-term corrective slide.

Below the mentioned support, the pair is likely to break below the 1.3400 handle and head towards testing 1.3330 intermediate support en-route the 1.33 handle and 1.3280 horizontal support.

On the upside, 1.3550 level now seems to act as immediate resistance, which is followed by a strong hurdle near the 1.3600 handle, which if conquered should pave way for extension of the pair’s up-move beyond 1.3660 level towards the 1.3700 round figure mark. The ongoing bullish momentum could further get extended towards the 1.3800 handle ahead of the next major hurdle near mid-1.3800s.