Sterling jumped on a fresh upbeat mood on Tuesday. The following November 10 GBPUSD Elliott wave analysis share some technical insights.
November 10, 2020 / AtoZ Markets – GBP pairs gained on Monday and have continued northward in the early London session on Tuesday. GBPUSD closed above the 1.318 resistance and is currently building momentum above 1.32. However, the price is close to the roof of a channel where we might see a strong resistance. The GBP rally from 1.268 has been corrective and one might wonder if bearish traction would start going forward.
Tuesday’s better UK data forced a significant rally across GBP pairs. GBPUSD hits its highest price since early September after Brexit talks were set to continue. With the USD plummeting and both Brexit parties expressing optimism, the currency pair over 500 pips (+4.45%) since the 3rd week of September. With vaccine and Brexit optimism, fresh USD weakness should ensue, thus propelling further GBPUSD surge toward 1.3488 top. However, Brexit always has its own way of surprising us. With technicals showing that the rally from 1.2678 is corrective, GBPUSD could be rejected below 1.33. Otherwise, we should prepare for 1.34 or higher. A lot will therefore depend on Brexit, vaccine development, and the demand and supply battle around these key levels (as price could have priced in further vaccine headlines, especially if positive).
Later in the week, the spotlight will be on the UK prelim GDP, the BOE, and FED speeches together with the US CPI data. All these will come on Thursday and Friday and might add to general GBP volatilities. Let’s take a look at the technical side.
November 10 GBPUSD Elliott wave analysis
From the Elliott wave perspective, GBPUSD is currently at the roof of a corrective channel. A double zigzag pattern is close to completion as mentioned in the last update where we used the chart below.
In the chart above, during the US election, we reckoned one more leg to the upside to 1.32-1.33. Afterward, a decline should follow. Price is currently doing just that. We will now have to see if the decline follows the path of the new update in the chart below.
A dip from the 1.3245-1.33 resistance zone to 1.31 is very much likely. It will also confirm the end of corrective wave 2. Further bearish pressure is expected below 1.3 down to 1.26 in the medium term. However, if the price pushes above 1.33, we will have to reconsider our forecast and prepare for a surge above the 1.3485 resistance level.