GBP/USD: Out Of Overbought Territory, And With Upbeat Fundamentals, Cable Is Ready To Climb

Winter is coming – Prime Minister Boris Johnson has warned his fellow Brits about chances of another wave of coronavirus on the other side of the summer. However, the UK’s current state of affairs seems promising. Jabbing around half the population with one vaccine is proving immensely successful, and the next step of reopening seems all but certain.

Britain’s Consumer Price Index marginally disappointed with 0.7% yearly in March, having a negligible impact on the sterling., nor does a speech by Bank of England Governor Andrew Bailey, who focused on diversity rather than monetary policy. The bigger moves come from the dollar.

The safe-haven greenback benefited from Tuesday’s sell-off in stock markets, as investors flocked into the world’s reserve currency. However, the winds are changing once again, with S&P 500 futures moving up. The US economy continues growing at a rapid pace – and virus figures are turning back down after a mini-wave beforehand. That should allow stocks to rise and the dollar to resume its falls.

After a flurry of activity around the infrastructure spending plans, the White House has recently moved to other topics, leaving the scene to the shifting market mood. Apart from the potential rise in equities, the drop of US ten-year yields below 1.60% is also pointing to a fresh descent for the dollar.

All in all, cable has reasons to rise.

GBP/USD Technical Analysis

(Click on image to enlarge)

Tuesday’s fall from 1.40 has pushed the Relative Strength Index (RSI) below 70 – outside overbought territory and allowing for gains. Momentum remains to the upside and the currency pair is trading above the 50, 100 and 200 Simple Moving Averages.

OVerall, bulls are in the driver’s seat. 

Some resistance awaits at 1.3960, a level that capped GBP/USD in March. It is followed by the peak of 1.4010. Further above, 1.4050 and 1.4075 are eyed.

1 2
View single page >> |

Disclaimer: Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, risk ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.