GBP/USD Forecast: Correction is over, fresh Powell-powered attack on 1.42 looks imminent
- GBP/USD has bounced off the lows as Powell's dovish message weighs on the dollar.
- US data may trigger the next move up, as the UK's successful vaccination campaign boosts the pound.
- Thursday's four-hour char is painting a bullish picture.
One hundred pips off the highs but in a far better shape – Thursday's GBP/USD chart is showing an exit out of the overbought territory and fundamental conditions have also improved. Markets seemed to have been waiting for a further reassuring from Jerome Powell, Chairman of the Federal Reserve, before making another convincing move higher. The upbeat mood is adverse for the dollar, despite higher bond yields.
The world's most powerful central banker seemed determined to push inflation higher, aiming to reach the Fed's 2% target within three years. With investors fearing higher prices – and rate hikes – much sooner, Powell all but dismissed fears of rising prices and committed to printing dollars.
Another mood booster came from the FDA, which advanced Johnson and Johnson's single-shot vaccine ahead of final approval in the next few days. That also serves as a reminder that Britain's vaccination campaign continues at full speed after jabbing a quarter of its population.
Looking forward, a busy US economic calendar awaits traders, with elevated expectations for all figures – from a revision of fourth-quarter growth figures, through Durable Goods Orders for January and finally weekly jobless claims. When the bar is high, so is the probability of disappointment. A set of downbeat economic figures may provide cable bulls fuel for the next rally.
See
- US January Durable Goods and Q4 GDP Preview: Consumers worry but they spend
- US Initial Jobless Claims Preview: Exceptional layoffs become mundane
All in all, there is room for optimism about the UK and more importantly, for a weaker dollar – also for good reasons.
GBP/USD Technical Analysis
The Relative Strength Index on the four-hour chart has dropped below 70, exiting overbought conditions and opening the door to further gains. Momentum remains to the upside and the currency pair continues trading above the 50, 100 and 200 Simple Moving Averages. All in all, bulls are back in the saddle.
Resistance awaits at 1.42, the round number, and then by the 2021 peak of 1.4240. Further up, 1.43 and 1.450 are eyed.
Support awaits at the daily low of 1.4120, followed by 1.4080 and 1.4050, both stepping stones on the way up.
GBP/USD Price Forecast 2021: Cable braces for calendar comeback amid three exits
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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.
