GBP/USD Forecast: Challenging channel top on hawkish comments, risk-on
- The GBP/USD rises to new highs around $1.4170 and consolidates its gains.
- Speeches by Chinese President Xi and BOC member McCafferty boost the pair.
- The technical picture remains bullish, pointing to further potential gains.
The GBP/USD is trading around $1.4170, up around 0.25% on the day. The first boost was a global one. Chinese President Xi Jinping gave a keynote speech at the Boao Forum and pledged to open the Chinese economy. Also, he talked about lowering tariffs and sent a conciliatory message in general. Tensions about tariffs between the US and China continue dominating the headlines. Even if these words are not followed up by deeds, the signal was well received. Stock markets responded with rises and risk currencies also gained ground against the US Dollar and the Japanese Yen.
The British Pound waited until the wake of the European session to begin moving higher. It then got a local boost as well. Ian McCafferty, a member of the Monetary Policy Committee, said the Bank of England should not delay raising interest rates as pay rises. These hawkish comments are not surprising from McCafferty, but pointing to rising wages is an important point that other members will also have to take into account.
Andy Haldane, the Chief Economist at the BOE, did not refer to monetary policy in his speech in Melbourne. Haldane is a dove and by not expressing concerns, he allows Sterling to continue higher.
In the US, the Producer Price Index is the main event of the day. Also, watch out for political developments after the FBI raided the home, hotel room, and offices of Michael Cohen, President Trump's attorney.
GBP/USD Technical Analysis - Looking good
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The GBP/USD is now close to the top end of the downtrend channel. The pair is battling $1.4173, the level that downtrend support is currently at. The RSI is above 50, Momentum is positive, and cable is also above the 50-day Simple Moving Average which comes out around $1.4000. All are positive signs.
The pair is still battling with $1.4160, which was the February 16th high. Further above, we find $1.4244, a line that capped the pair in late March. $1.4280, a swing high from early in the year is next.
Looking down, $1.4170 is the February 26th swing high. It is followed by the round level of $1.4000 and then by $1.3935.
Author
Yohay Elam
FXStreet
Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.
