GBPUSD has reached a new intraday high, moving away from the 38.2% retracement level of the July trading range at 1.35263. After some uncertainty near this level yesterday, a corrective dip during the Asian session found support around a key swing range of 1.3505 to 1.3514. In early North American trading, the price briefly dropped below the 38.2% retracement to 1.3523 but quickly bounced back, showing strong upward momentum. GBPUSD then rose to a new intraday high of 1.3561, approaching a swing area target.

Potential Break Beyond 1.3561

If GBPUSD breaks above 1.3561, it could aim for the 50% midpoint of the July trading range at 1.35764. After two days of testing and surpassing the 38.2% retracement, buyers are gaining strength. Market attention is now on whether this upward momentum can continue to reach the 50% level, and possibly beyond. We view the move above the 38.2% retracement as a key signal for our strategy. Michalowski’s technical analysis aligns with fundamental drivers, boosting our confidence that buyers are taking control. This isn’t just a fleeting chart pattern; it reflects ongoing economic trends. UK core inflation is currently at a stubborn 6.9%, notably higher than the U.S. rate of 4.7%. This situation may lead the Bank of England to consider further interest rate hikes while the Federal Reserve appears close to the end of its own rate-raising cycle. Historically, a growing interest rate advantage for the pound often results in lasting strength in the currency pair.

Buying Call Options Strategy

Given the positive outlook, we should consider buying call options with a strike price near the 50% midpoint of 1.35764. This strategy allows us to benefit from the anticipated upward movement while limiting potential losses to the premium paid. It’s a careful approach to the question of whether momentum can be sustained. A solid break and hold above the 1.3561 swing area would prompt us to increase our position. We will closely monitor upcoming retail sales and employment figures from both countries. Strong data from the UK combined with weaker U.S. data could provide the boost needed to surpass the next target level. Create your live VT Markets account and start trading now.

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