GBP/USD soars above 1.1600, hitting a fresh six-week high

• GBP/USD rallies sharply above 1.1600 due to a vote of confidence to UK’s PM Rishi Sunak.
• Speculations for a Fed pivot increase as recently featured data shows the housing market is crashing.
• GBP/USD: From a technical perspective is neutral-to-downward biased unless it reclaims the 100-DMA around 1.1750.

The Pound Sterling extended its rally against the US Dollar for two consecutive days, above its opening price by more than 1%, on news that the UK new Prime Minister Rishi Sunak may delay the announcement of a fiscal plan on October 31, to mid-November. Also, further US economic data shows deterioration in the housing market, weakening the USD, a tailwind for the GBP. At the time of writing, the GBP/USD is trading at 1.1620.

Sentiment remains positive, with Wall Street trading in the green. US economic data revealed by the US Commerce Department that home sales dropped at a 10.9% MoM pace in September, while August’s previous figures of 685K units were downward revised to 677K, signaling that the Federal Reserve aggression continues to dampen the housing market.

In the meantime, the financial markets’ perception of a Fed pivot continues to weigh in the greenback. The US Dollar Index, a measure of the buck’s value vs. a basket of six currencies, drops by almost 1%, down at 109.87, bolstering the GBP/USD.

Aside from this, Fed officials, in the blackout period ahead of the Federal Reserve Open Market Committee (FOMC) meeting in November, GBP/USD traders could shed some light on US economic data. On Thursday, the US calendar will feature the preliminary reading of the Gross Domestic Product (GDP) for Q3, which is expected at 2.4%. Of note, the last report of the Atlanta GDPNow estimates for Q3 GDP an increase of 2.9%.

GBP/USD Price Forecast: Technical outlook

The GBP/USD is neutral-to-downward biased until the major reclaims the 100-day Exponential Moving Average (EMA) at 1.1748. Nevertheless, with the Relative Strength Index (RSI) aiming higher, at 61.68, a move towards 1.1700 is on the cards. But traders should be aware of sudden market mood shifts, with sentiment remaining fragile in the last couple of weeks.

Therefore, the GBP/USD first resistance would be 1.1700, followed by the 100-day EMA at 1.1748, which will expose the 1.1800 figure once cleared. On the other hand, the GBP/USD first support would be 1.1600, followed by the 1.1500 figure, ahead of the October 26 daily low at 1.1430.