GBP/USD Forecast: Sterling creeps around upward trending channel
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Sterling is trading up 0.3% at around 1.4270 against the US Dollar on Monday after the weekend air strikes of joint military forces of the US, France and Great Britain on Syria’s banned weapons infrastructure. Although attacks on Syria were expected to infuriate Syria’s ally Russia, there actually no continuous escalation of the geopolitical tension via media so the risk on the FX market is also dissipating.
The GBP/USD experienced a roller-coaster ride on Friday last week rising to 1.4297 first before sliding lower to hit almost 1.4200 level. As the geopolitical risk is fading away, the macro news is seen taking over, especially with the key the UK data scheduled for this week, including the labor market report due on Tuesday, inflation data due on Wednesday and the UK retail sales report scheduled for Thursday.
On Monday, only minor UK housing data were out with Rightmove house price index rising to an all-time record in March with the average UK house price jumping up 1.5% m/m while rising 2.1% over the year in March to £304.504 while house prices in London falling for the seventh consecutive month on the annual rate basis.
GBP/USD is now at sight of the cyclical high of 1.4345 from the beginning of this year, which is also the highest level of the currency pair since the Brexit-related slump from 1.5000 at the night of the Brexit referendum to 1.1920 post Brexit low from October 7, 2016.
Technically GBP/USD broke up back to the upward trending channel that has begun on March 1 after the UK reached a Brexit withdrawal deal with European Union with the negotiating period extension to December 2020.
Technical oscillators like Momentum and the Relative Strength Index (RSI) are pointing upwards on 1-hour chart and the Slow Stochastics also made a bullish crossover although only in the neutral territory. The fundamental push for Sterling higher is supported by the interest rate outlook presented earlier this week by the Bank of England Monetary Policy Committee member Ian McCafferty and after the pair breaks 1.4300 psychological level the next target is the cyclical high of 1.4345.
GBP/USD 1-hour chart
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