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GBP/USD analysis: Keeps bullish momentum despite correction, major resistance ahead

Late on Wednesday, the US dollar tumbled after the release of the interview of Donald Trump with the WSJ. The decline pushed the GBP/USD clearly above 1.2500. On Thursday Cable followed the evolution of the US dollar index. It peaked during the Asian session at 1.2575, a 2-week high, and then started to retreat. It continues to move on a slow pace retreat mode toward 1.2500. That area has now become a short-term support area. A break lower could remove all the upside momentum of the pair, leaving it vulnerable.

A low liquidity environment is expected for the next hours, as many countries around the globe get ready for Friday’s holiday. Wall Street will not open. Low volume and the US dropping bombs is a good environment for erratic moves. Any price action moves from the next hours until Monday, will need a confirmation on Tuesday, when markets return to full normality.

Thursday’s decline represent a correction so far. The upside tone still prevails with price holding above the 20-day moving average. It has approached a very strong resistance area between 1.2580 and 1.2610. A break higher would open the doors for a rally to 1.2720/ 1.2750.

GBP/USD

Support levels: 1.2490 1.2450 1.2400

Resistance levels: 1.2575 1.2595 1.2620