GBP/USD Forecast: Dips will likely continue to attract buyers

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3966

UK Chancellor Rishi Sunak announced plans to support business, increase taxes.
The UK February Markit Services PMI came in at 49.5, below the expected 49.7.
GBP/USD is technically neutral but with the bearish potential well-limited.

The GBP/USD pair is ending the day as it started it, in the 1.3960/70 price zone. The pair surged to 1.4005 from where it fell to 1.3920 during US trading hours, as the dollar gathered some temporal attention on rising yields. Weighing on the pound, the February Markit Services PMI came in at 49.5, below the expected 49.7, as a result of the national lockdown affecting travel and hospitality.

UK Chancellor Rishi Sunak presented the 2021 budget, which included further support for companies and citizens and a plan to increase taxes in the near future to bankroll the pandemic-related spending. The furlough scheme will be extended until the end of September. The government expects the economy to return to pre-coronavirus GDP levels by mid-2022. This Thursday, Markit will present the February UK Construction PMI, foreseen at 51 from 49.2 in January.

GBP/USD short-term technical outlook

The GBP/USD pair is neutral in the near-term, but the risk remains skewed to the upside. In the 4-hour chart, it is developing above all of its moving averages, although the 20 and 100 SMA converge at 1.3940, with modest directional strength. The Momentum indicator is flat just above its 100 level, while the RSI heads modestly lower around 48. Dips will likely continue to attract buyers.

Support levels: 1.3930 1.3880 1.3830

Resistance levels: 1.4000 1.4045 1.4090

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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