GBP/USD Forecast: Bulls eyeing a test of 1.4000

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3942

The EU parliament approved the Brexit trade deal, despite tensions with the UK.
GBP/USD jumped to 1.3950 as an optimistic US Federal Reserve spurred risk-appetite.
GBP/USD technical perspective suggests the pair can retest the 1.4000 threshold.

The GBP/USD pair surged to 1.3950, a one-week high following comments from US Federal Reserve chief Jerome Powell, mostly optimistic but at the same time repeating his well-known cautious message about the economic recovery and the future of inflation and employment. The dollar fell as investors became more optimistic, demanding high-yielding assets.

The pound found additional support on news indicating that the EU parliament gave a final vote to the Brexit trade and security deal, with 660 votes in favor and just 5 against it. The now ratified deal provides the framework for London's new relationship with the 27-member union, despite tensions between both parts persist. The UK has not fully implemented some of the agreements, while the dismal mood is also related to the delayed provision of AstraZeneca vaccines to the Union.

Data wise, the UK published the March BRC Shop Price Index, which printed t -1.3% from -2.4% in the previous month.

GBP/USD short-term technical outlook

The GBP/USD pair retreated from the mentioned high but trades above 1.3930, the 23.6% replacement of its April rally. In general, the risk is skewed to the upside, as the pair has settled above all of its moving averages, with the 20 SMA slowly gaining bullish traction above the longer ones. Technical indicators have advanced within positive levels to fresh weekly highs, maintaining their bullish slopes. Further gains are likely as long as the pair holds above the mentioned Fibonacci level.

Support levels: 1.3930 1.3880 1.3835

Resistance levels: 1.3985 1.4020 1.4060

View Live Chart for the GBP/USD

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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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