Pound Sterling Price News and Forecast: GBP/USD has tumbled over 100 pips from the highs after a massive rally
|GBP/USD has room to rise once the correction is over
Fed Chair Powell´s dovishness and the UK´s exit plan may trigger a new upward move after the correction ends, Yohay Elam, an Analyst at FXStreet, reports.
Key quotes
“Bloated estimates about Britain's bounceback are behind the fall, but the picture remains positive for sterling as the vaccination campaign continues at full speed.”
“Powell appears before Congress again on Wednesday and will likely reiterate that the Fed ‘is not thinking about thinking of raising rates’ as he once said. For the dollar, while ten-year Treasury yields hold below 1.50%, the dollar's gains will likely be limited.”
GBP/USD: Every small dip is a buying opportunity
The British Pound has continued to display strength with a broader weakness in dollar. The pound surged to nearly three-year high of 1.4235 and may look to extend higher as the fundamental landscape has undergone little change while US Federal Reserve Chair Jerome Powell reiterated that interest rates will remain low and the Fed will keep buying bonds to support the US economy, which is a long-term negative factor for the dollar. Also, UK government is taking steps to ease the lockdown in a staggered manner, keeping investors' interest intact in pound.
But technically, as GBP/USD moves to its highest level in nearly three years, the topside barriers have become harder to identify. That being said, the next major level of resistance might be derived from price action in early 2018. Ranging from 1.4298 to 1.4377 the zone coincides with a series of swing highs from January and April 2018. With that in mind, traders with bullish exposure may consider raising protective stops or reducing exposure around the area in the event bears make a stand.
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