GBP/USD Forecast: Correcting lower, but bulls retain control

Valeria Bednarik FXStreet

GBP/USD Current price: 1.4123

The pound outperforms its major rivals when the greenback is in sell-off mode.
BOE’s Broadbent noted that sterling appreciation could have some depressive effect on inflation.
GBP/USD is trading around 1.4100 after hitting a multi-year high of 1.4237.

The GBP/USD pair hit 1.4237 during Asian trading hours, a level that was last seen in April 2018. The pair, however, gave up quickly afterwards to end the day with modest gains around the 1.4120 level. The pound continues to outperform its major rivals when the greenback enters sell-off mode, as the speed of the coronavirus immunization campaign hints at a sooner economic comeback.

The Bank of England took note of the pound’s strength, as BOE’s Deputy Governor Ben Broadbent, testifying on monetary policy, noted that sterling appreciation could have some depressive effect on inflation, adding that inflation expectations are not a level that would be worrisome for policymakers. The UK macroeconomic calendar will remain empty this Thursday.

GBP/USD short-term technical outlook

The GBP/USD pair has a limited bearish potential despite trading over 100 pips below its daily high. The movement seems a due correction, but further declines are unclear in the near-term. The 4-hour chart shows that the pair bottomed around a bullish 20 SMA, currently providing dynamic support around 1.4090. Technical indicators retreated from overbought readings, the Momentum heading south within positive levels and the RSI flat at 58.

Support levels: 1.4090 1.4035 1.3985

Resistance levels: 1.4140 1.4185 1.4235

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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