GBP/USD Forecast: Dollar bulls taking over

Valeria Bednarik FXStreet

GBP/USD Current price: 1.390

UK encouraging data and soaring oil prices provided support to the pound.
Soaring US Treasury yields after Powell’s speech sent the dollar skyrocketing.
GBP/USD struggling around 1.3900 and at risk of falling further.

The British Pound was among the best performers against the greenback, surging above the 1.4000 level for the first time this week. UK data was encouraging, as the February Markit Construction PMI jumped to 53.3, better than anticipated. However, an unexpected boost came from soaring oil prices, which reached one-year highs following headlines indicating that the OPEC+ is reportedly close to agreeing to leave output unchanged in April.

However, US Federal Reserve chief Jerome Powell gave a boost to the dollar, cooling hopes for a soon-to-come rate hike, despite soaring yields. The GBP/USD pair retreated sharply from the mentioned high, losing the 1.3900 mark in the American afternoon. Friday will be a light day in terms of data for the UK, as the country will only publish February Halifax House Prices.

GBP/USD short-term technical outlook

The GBP/USD pair trades in the 1.3900 price zone, with a neutral-to-bearish stance in the near-term. The 4-hour chart shows that the pair spent the day hovering around its 20 and 100 SMAs, both lacking directional strength. The pair is now speeding down below them, favoring a bearish extension. The Momentum indicator is piercing its 100 level, while the RSI hovers around 42, indicating increasing selling interest. A strong support level is 1.3860, where the pair bottomed this week.

Support levels: 1.3860 1.3820 1.3770

Resistance levels: 1.3950 1.3990 1.4030

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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