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Will GBP/USD Hold its Bearish Breakout?

GBP/USD has once again failed to clear above 1.5676 after multiple attempts. Last week, the BoE Inflation Report made the central bank to be less hawkish than many expected and the pound seemed to have lost its footing across the board. Cable went from attempting a bullish continuation breakout, to a bearish reversal breakout.

GBP/USD 4H Chart 8/10


(click co to enlarge)

The GBP/USD 4H chart shows a bearish breakout below 1.5448. However, the break was not clear and price is pulling back up. Now, if GBP/USD is to hold this bearish breakout, it should really find resistance below or around 1.5550, and the 4H RSI should hold under 60. If we get some heightened volatility on the pullback, maybe we can give some elbow space to the cluster of 200-, 100-, and 50-period simple moving averages (SMAs) around 1.5575. Above this level, the GBP/USD would have shown a false break to the downside, which actually adds to the case of a bullish outlook.

GBP/USD Daily Chart 8/10

(click to enlarge)

Let's take a look at the daily chart, where the market is bullish-neutral. It has been bullish since climbing from the 2015-low in April around 1.46 up to the 1.5930 high on the year. It has since been consolidating. A break above 1.5680 would bring the 1.58/1.5815 high and the 1.5930 highs in sight. Below 1.5448, the 1.5330, 1.5170, and the 1.5090 pivots come into play.