GBP/USD Forecast: Sterling Benefits From Post-US Elections Weakness Of The Dollar Targeting 1.3200

• For once it was not the Brexit headline that pushed currencies to move, but the US Mid-term elections that saw Democrats locking the House while Republicans retained the Senate.
• The Halihaf house price index decelerated in October to 1.5 percent y/y from the growth rate of 2.5 percent in September, which is the lowest rate of annual growth since March 2013. 
• Sterling broke above the resistance zone of 1.3085-1.3100  and it is targeting 1.3200 representing a 50 percent Fibonacci retracement of a post-Brexit rebound from 1.1970 to 1.4377. 

The GBP/USD rose to a fresh 2-week high of 1.3160 and it is trading near the highs after the  US Mid-term elections saw Democrats taking control over the HOuse while Republicans retained the Senate. The division of power plays out in line with market expectation but still weighs on the US Dollar. With the GBP/USD trading well above a 50-day moving average at 1.3031 and a 100-day moving average of 1.3039, the market is set to form a golden cross on a daily chart indicating further upside. 

While the UK Cabinet was meeting on Tuesday with only general headlines coming out of the meeting, the market is assuming that the UK government is intensively working on the resolution of Irish border backstop.

Meanwhile the UK property market broker Halifax released the monthly house price index indicating the biggest slowdown in price growth of the UK houses in last five year this October. The Halifax house price index decelerated in October to 1.5 percent y/y from the growth rate of 2.5 percent in September, which is the lowest rate of annual growth since March 2013.

The GBP/USD broke the 26.3 percent Fibonacci retracement level of 1.3085 on Tuesday and it was boosted further overnight. The US Mid-term elections saw Democrats taking over House while Republicans retained the Senate and the power division is weighing on the greenback despite this being largely expected result of elections. Technical oscillators are pointing to the upside with the Relative Strength Index and Slow Stochastics moving to overbought territory. The key area of resistance at 1.3085 representing 23.6 percent Fibonacci retracement of Sterling from 2018 high of 1.4377 to 2018 low of 1.2662 was broken and the currency pair is now in the run for 1.3200 and 1.3240 next. Moreover, the move above 1.3100 is likely to generate a golden cross formation on a daily chart, the crossover of a 50-day moving average and a 100-day moving average, indicating a further move toward targeted levels. 

GBPUSD 1-hour chart