GBP/USD Forecast: Further gains linked to persistent dollar’s weakness

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2621

No progress in Brexit talks, with remaining “significant differences” between the US and the EU.
UK PM Johnson wore a mask in public for the first time, asked for a “stricter” approach to its use.
GBP/USD is neutral-to-bullish, could gather momentum once above 1.2690.

The GBP/USD pair hit 1.2663 on Friday, unable to surpass its weekly high and retreating to settle at 1.2621. The rally was the result of the broad dollar’s weakness, as news coming from the UK lend no support to the Pound. Market players ignored headlines indicating no progress in Brexit talks throughout the week, with remaining “significant differences” on a number of important issues.

By the end of the week, UK PM Johnson said that he hopes to have a V-shape economic recovery, but added that the government cannot be certain. He also said that a “stricter” approach to the use of face masks in the kingdom is needed, with Johnson wearing one for the first time when in public ever since the pandemic hit the UK. At the beginning of the week, BOE’s Governor Bailed is due to participate in a panel discussion with the Federal Reserve Bank of New York and could make some comments about future monetary policies.

GBP/USD short-term technical outlook

The GBP/USD pair is near the one-month high set at the beginning of July at 1.2669, neutral-to-bullish according to the daily chart. The pair has held for a fourth consecutive day above its 20 and 100 SMA, with sellers aligned ahead of a flat 200 SMA, this last around 1.2690. Technical indicators, in the meantime, hold within positive levels but lack directional momentum. In the 4-hour chart, a bullish 20 SMA provides dynamic support, now at 1.2595, but keeps heading north above the larger ones. Technical indicators, in the meantime, hold directionless well into positive ground, limiting the chances of a downward extension in the near-term.

Support levels: 1.2630 1.2595 1.2550

Resistance levels: 1.2685 1.2730 1.2770

View Live Chart for the GBP/USD

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.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold holds gains near $5,000 as China's gold buying drives demand

Gold price clings to the latest uptick near $5,000 in Asian trading on Monday. The precious metal holds its recovery amid a weaker US Dollar and rising demand from the Chinese central bank. The delayed release of the US employment report for January will be in the spotlight later this week.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.