- GBP/USD has extended rally to a fresh monthly high.
- Technical picture shows that the pair need to stage a correction before pushing higher.
- UK PM Johnson is reportedly not expected to announce post-Christmas restrictions this week.
GBP/USD has preserved its bullish momentum and reached its highest level since late November at 1.3388 early Thursday. Easing concerns over tighter Omicron-related restrictions in the UK and some positive Brexit headlines help the British pound attract investors but the technical picture suggests that there could be a correction before the pair can extend its rally.
Late Wednesday, the findings of a recently conducted study in Scotland and England showed that the Omicron variant was sending fewer people to hospitals than the Delta variant. Earlier in the week, investors were worried that the UK could introduce new measures to slow the spread of the virus after the Christmas holiday but this report seems to be changing that view. Additionally, Sky News said on Thursday that British Prime Minister Boris Johnson was not expected to announce post-Christmas restrictions this week.
Meanwhile, the Independent reported that the UK has reached a deal with the European Union on fishing rights and the division of quotas, providing an additional boost to the pound.
Later in the day, the Personal Consumption Expenditures (PCE) Price Index data from the US will be watched closely by market participants. Experts forecast the Core PCE to rise to 4.5% on a yearly basis in November from 4.1% in October. Although this reading is unlikely to change the Fed's policy outlook, a stronger-than-expected figure could weigh on sentiment and help the greenback stay resilient against its rivals.
The US Department of Labor will also release the weekly Initial Jobless Claims data but the risk perception is likely to continue to impact the financial markets before they turn subdued on Christmas Eve.
GBP/USD Technical Analysis
On the four-hour chart, the Relative Strength Index (RSI) indicator climbed above 70 for the first time since October 19, showing overbought conditions. The last time that happened, the pair staged a correction before regaining its traction and a similar action could be expected.
On the downside, the 200-period SMA forms the first support at 1.3330 and as long as the pair holds above that level, buyers could look to remain in control. 1.3400 (psychological level) aligns as the first target before 1.3440 (static level) and 1.3470 (static level).
Below 1.3330, 1.3300 (psychological level) is the next support before 1.3260 (100-period SMA, 50-period SMA).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.