GBP/USD tests key support post US stimulus vote & ahead of BoE Andrew Bailey. WTI crude oil hits 2 year high.

GBP/USD breaks down ahead of BoE Governor Andrew Bailey
 

GBP/USD is edging lower after the US Senate passed the $1.9 trillion stimulus package.

The stronger US Dollar is overshadowing upbeat covid numbers in the UK & the start of the economic reopening process (FXB, UUP).

BoE’s Andrew Bailey is due to speak today in his last appearance ahead of the the BoE MPC. Investors will be watching closely for clues as to whether the central bank will start easing back on bond purchases.

Where next for GBP/USD?

GBP/USD currently trades depressed near a three week low. 

It testing a key support at 1.3820, a level which offered support in mid February and which marks the lower band of the 11 week ascending trendline. 

A break below this level and the subsequent 50 sma at 1.3750 could negate the current uptrend and see the run south gain momentum towards 1.36.

Should 1.3820 hold, the bulls could look back up towards horizontal resistance at 1.3950 prior to 1.40 round number.

WTI crude oil hits 2 year high

WTI struck a its highest level since October 2018, whilst Brent climbed over $70 on reports of attacks on Saudi Arabian facilities.

US senate passed the Biden administration’s $1.9 trillion bill. The bill is expected to accelerate US economic growth.

Better than expected China trade data also favors the oil bulls.

Where next for WTI?

WTI trades above its ascending 50 & 100 sma on the 4 hour chart. The price is attempting to break out of the upper band of its ascending channel dating back to early February indicating a bullish trend. 

However, the RSI is in overbought territory so some consolidation or an easing in the price could be on the cards ahead of the further gains.
 

The bulls will target $70 highs seen in July and October 2018. It would take a break through support around $63.90 to negate the current bullish trend, beyond which support can be seen at 62.60 the 50 sma (BNO, OIL).