GBP/USD analysis: speculative interest thinking of 1.4000

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3809

Scotland can face a £16B-a-year loss with Brexit.
UK inflation data to set the tone this Tuesday.

The Pound benefited once again from broad-based dollar's weakness, resulting in the GBP/USD pair reaching a new high since June 2016 and the outcome of the Brexit referendum, at 1.3819. The pair retreated modestly from the mentioned high, but buyers surged around 1.3765, now the immediate support. There were no macroeconomic releases in the UK this Tuesday, although some Brexit-related headlines hit the wires. The Scottish PM, Nicola Sturgeon, discussed a local forecast which indicates that the Brexit could cost Scotland up to £16B a year, in an attempt to convince authorities about the need of staying in the single market. The Sterling will face a major macroeconomic challenge this Tuesday, as the kingdom will release multiple inflation figures, including CPI, PPI and the Retail Price index for December. Inflation continues to be a major concern as despite expected to have topped, it keeps rising and may force the BOE to act against its will. The pair heads into the Asian opening trading a handful of pips above the 1.3800 figure and poised to extend its advance, given that in the 4 hours chart, it's developing well above a bullish 20 SMA, while the RSI indicator keeps heading higher despite being at 81. The Momentum eased modestly within extreme overbought readings, but with the price about to challenge its daily high, a relevant correction is out of the question for now. The immediate resistance is February 2016 low at 1.3835, while above this last, there's little in the way until the 1.4000 figure.

Support levels: 1.3765 1.3620 1.3580

Resistance levels: 1.3835 1.3860 1.3895

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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