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GBP/USD: Correction or temp reversal?

FXStreet (Barcelona) - GBP/USD is trading at 1.6076, down -0.04% on the day, having posted a daily high at 1.6131 and low at 1.6026.

GBP/USD is moving at a snails pace now with much of the liquidity at ease on the side-lines again with profits taken off the table and the pair struggles to penetrate the 1.61 handle with any conviction. That said, it is now depending on further signals developing during this move up from 1.5980 territory to confirm whether this is just a temporary correction on the bear trend or whether this is the start of a major reversal. The FOMC minutes this week are likely to add some fireworks to the display and we should keep in mind, for the medium terms sake, that we are entering the year end months as well, which is usually a period of repatriation of dollars that is supportive of the greenback. In respect of the central banks, we would keep a closer eye on spare capacity in the two economies as we draw closer to the holiday season when eyes will turn to the new year and whether, at least in respect of the BoE, interest rates will likely be increased in the first quarter of 2015 or not and how much of such an expectation is already priced in we are yet to see.

GBP/USD noteworthy levels

Spot is presently trading at 1.6076, and next resistance can be seen at 1.6083 (Daily Open), 1.6092 (Hourly 100 SMA), 1.6101 (Yesterday's High), 1.6131 (Daily High) and 1.6137 (Daily Classic R1). Next support to the downside can be found at 1.6071 (Weekly Classic PP), 1.6068 (Hourly 20 EMA), 1.6046 (Daily Classic PP), 1.6026 (Daily Low) and 1.5991 (Daily Classic S1).

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