GBP/USD Forecast: Bulls may aim for a test of 1.4000

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3908

Brexit-related concerns and the Scottish election undermine demand for the pound.
The UK April Markit Manufacturing PMI is expected to be confirmed at 60.7.
GBP/USD met sellers around a critical Fibonacci resistance around the 1.3930 level.

The GBP/USD pair recovered most of the ground lost on Friday, ending this first day of the week a handful of pips above the 1.3900 level. The pair traded as high as 1.3931 but was unable to break the key Fibonacci resistance level.

There’s a lot of political noise in the UK, but little macroeconomic data. On the Brexit front, UK authorities had agreed to issue the first post-Brexit licenses to French fishing vessels. Permits came after French President Emmanuel Macron menaced to increase already tight export control on UK fisheries products after the kingdom left the EU. Tensions persist, discouraging pound buyers. Also, Scotland is heading into the polls this Thursday, May 6, and a victory from the Scottish National Party, which has ruled the nation since 2014, may bring back to the table the independence’s battle.

The UK will publish on Tuesday, March money figures, while Markit will release the April Manufacturing PMI foreseen at 60.7, unchanged from its preliminary estimates.

GBP/USD short-term technical outlook

The GBP/USD pair holds on to daily gains but lacks follow-through. The 4-hour chart shows that the pair has managed to overcome its moving averages, currently developing a few pips above its 20 SMA. Technical indicators reached their midlines before losing strength, with the Momentum now retreating and the RSI stable at around 54. Bulls will have better chances on a clear break above 1.3930, should lead to a retest of 1.3976, en route to the 1.4010 region.

Support levels: 1.3845 1.3800 1.3760

Resistance levels: 1.3930 1.3975 1.4010

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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