The GBPUSD tested the lows for the year and month in the move lower yesterday and held that key level The surprise retail sales report today, pushed the pair back higher. However, the pair found sellers against the 100 and 200 hour moving averages (blue and green lines in the chart below). Those levels come in at the 1.5674 and 1.5677 level currently. The high for the day came in at 1.5670. So early sellers leaned against those risk defining technical levels on the first test at least.
GBPUSD hourly chart.
The move back to the downside, has seen the price stall against the 1.5618 to 1.5628 support area. This area has had a number of lows where the market bounced over the last month (follow the green circled numbers). Holding this area is keeping the the buyers in control. However, that 100 and 200 hour moving average remains a tough resistance level that will need to be broken in order to push his pair higher in trading going forward. The market can go either way, but when two MA and the price converge, it typically is a signal for a momentum move.
Overall, the inability to take at the lows for the year yesterday, and the dip buying we are seeing in trading today is a positive (i.e. bullish). The retail sales were also good news for the UK. Keep an eye on the aforementioned support and resistance levels. they should give traders the clues needed to gauge the overall markets bias.
The lines in the sand have been drawn. If you are long and see the GBP taking control over the USD, you want to see the topside MA lines breached. If you are going with the US is king story, a break of the 1.5618-28 should provide some confidence now.