GBP/USD Outlook: Buyers Poised to Hit 1.4000 as Risk Soars, BOE Eyed

The outlook for GBP/USD is bullish on Wednesday, heading through the earlier London session. The GBP/USD pair is approaching the July highs of 1.3985, rebounding from the 1.3875 area.

Because of a generally weaker US dollar, the bulls hold on to 1.3900 as looming coronavirus fears fade, US infrastructure progresses, and dovish Fed expectations keep the bulls in control.

Coronavirus cases have declined in the UK, and vaccination campaigns have proven successful, supporting the pound.

As both sides try to resolve their differences, sterling bulls are also pinning their hopes on a successful Brexit, especially after the European Union (EU) withdrew from impending legal action against the UK under the Northern Ireland Protocol (NI).

Bank of England in the spotlight

Currently, traders are looking at ADP and ISM Services PMI data, but Final Services PMI in the UK could also be a potential trading incentive. The BOE report on Thursday and Friday’s NFP report are the most significant risk events for the Cable.

Bank of England will likely maintain its monetary policy adjustments while focusing on the economic outlook as inflation concerns mount, leading the Bank of England to announce a reduction sooner than expected. However, the central bank can refrain from sending any restrictive signals given the continued confidence in the economic recovery despite the shrinking of the Delta variant.

GBP/USD technical outlook: Bulls boiling for gains

The 4-hour chart of the GBP/USD shows a very bullish picture. We can see the price comfortably moving above the 20-period SMA. As indicated in yesterday’s forecast, the 200 and 50 SMAs have formed a bullish crossover. The next resistance could be 1.3985 (July high) ahead of 1.4000 (psychological mark). If the bullishness persists, the price may test 1.4096 (lower band of an order block) leading to June 02 highs and double top at 1.4240.

GBP/USD outlook on 4-hour chart

The volume is still not showing any sign of a fresh bullish wave on the 4-hour chart. However, yesterday’s down bar, closing near the highs with very high volume, keeps the buyers alive.