GBPUSD hits its highest price since May as the Conservatives maintain a lead at the polls. Growth in October came lower than expected. Will GBPUSD slow down the current rally a bit? The following looks at GBPUSD Elliott wave analysis.
December 10, 2019 | AtoZ Markets – Pound Sterling is enjoying a good ride from 1.196 – 3 months bullish trend. GBP is strong across the board as investors see the possibility of Brexit done in December or early in the first quarter of 2020. After over five months of staying in a wide range, GBPUSD broke above 1.3 and has gained nearly 180 pips more to hit the first technical target level. Currently, GBPUSD is close to the 1.32 handle where we might see some reactions from the bears.
Rallies slow down on disappointing GDP data and Brexit concerns
Meanwhile, the bullish momentum seems to be slowing down. This is coming as a result of slower GDP than expected (0%). This will make the third straight month without growths in the UK. On another hand, the US FOMC meeting on Wednesday will be eyed. The Fed is expected to keep rates unchanged throughout 2019. It now remained to be seen whether GBPUSD will shoot above 1.32 or retreats to prices to 1.31 or below before resuming upside. The Brexit remains the major risk concern. The election campaign in the UK is entering the final week. The Conservatives still maintain the early lead at the poll. PM Boris is expected to get a massive victory and then go get Brexit done. The campaigns are still ongoing.
GBPUSD Elliott wave analysis
The bullish impulse wave from 1.196 is ongoing and has hit the first target at 1.3175. From 1.2817, we started counting an impulse wave to end the 5th wave of the impulse wave before a major bearish correction starts. Days before the election, the market might go quiet as traders and investors look forward to the outcomes of the elections. As explained in the last update, the 5th wave is expected to be extended. Therefore a higher price target was set at 1.342. The new chart below shows there is still more room for the bulls to explore above 1.3175 resistance level (Charting tools from TradingView)
Depending on where you consider wave (iv) to end. Either with a triangle pattern at 1.2821 or a zigzag pattern at 1.2767, the 5th wave has started and is not yet over. A minor dip to retest 1.31 is expected to happen before the next round of rallies.