GBP/USD Price Forecast: Bounces from weekly lows as ‘hammer’ hints reversal

• GBP/USD edges up after bottoming out at 1.3010, with a ‘hammer’ pattern signaling potential for further upside.
• Clearing the October 10 high of 1.3093 and the 50-DMA at 1.3099 would open the door for buyers, with resistance at 1.3113 and 1.3134.
• A failure to break 1.3100 could see sellers push the pair back toward the week’s low of 1.3010.

The Pound Sterling recovers some ground against the greenback as a ‘hammer’ emerges on the daily chart and rises above 1.3050, registering gains of over 0.15%. Goodish economic data in the UK sponsored the GBP/USD’s recovery as the economy grew around estimates. Nevertheless, a slightly hot Producer Price Index (PPI) report in the US capped the GBP’s gains.

GBP/USD Price Forecast: Technical outlook

The GBP/USD seems to have bottomed out after retreating from yearly highs of 1.3434 to a daily low of 1.3010 on October 10. A ‘hammer’ formation preceded by a downtrend hints that a reversal is possible.

Nevertheless, the pair should clear the October 10 high of 1.3093, immediately followed by the 50-day moving average (DMA) at 1.3099, so buyers could remain hopeful of higher exchange rates.

In that outcome, the GBP/USD next resistance would be the 1.3100 figure, followed by the October 8 high at 1.3113. On further strength, the next supply zone will be the October 7 weekly high of 1.3134.

Conversely, if GBP/USD fails to clear 1.3100, sellers could step in and push prices below the psychological 1.3050 level, driving the exchange rate toward the week's lows at 1.3010.

From a momentum standpoint, the GBP/USD is barely biased, but the Relative Strength Index (RSI) has increased upwards during the last couple of days, opening the door for a leg-up.

GBP/USD Price Action – Daily Chart