GBP/USD Forecast: Reopenings optimism supports the pound

GBP/USD Current price: 1.4150

• UK’s progress in the battle against covid hints at a strong economic comeback.
• The UK will publish Q1 Gross Domestic Product this Wednesday, expected to have contracted.
• GBP/USD is extremely overbought but shows little signs of bullish exhaustion.

The GBP/USD pair reached 1.4166, its highest since late February, ending a third consecutive day with gains near such a level. The rally was the result of the persistent dollar’s weakness, despite a risk-averse environment. There were no changes in the latest political developments in the UK, which tend to put a cap on the pound’s gains. Instead, investors seem focused on encouraging news related to the pandemic. The UK reported a sharp decrease of covid-related deaths, with only 143 critical cases at the time being. Reopenings hint at a strong economic comeback in the second half of the year.

This Wednesday, the UK will publish the preliminary estimate of the Q1 Gross Domestic Product, foreseen at -1.5% from 1.3% in the previous quarter. The monthly GDP, however, is foreseen at 1.4%. The country will also report March industrial Production, expected to have increased by 2.9%.

GBP/USD short-term technical outlook

The GBP/USD pair is barely correcting extreme conditions, with no clear signs of an upcoming slide. The 4-hour chart shows that the pair kept advancing beyond bullish moving averages, while technical indicators are retreating within overbought readings. The pair posted a higher high and a higher low for a third consecutive day, which maintains the risk skewed to the upside. The main resistance is 1.4181, the high set on February 25, with further gains expected once the level is cleared.

Support levels: 1.4110 1.4065 1.4020

Resistance levels: 1.4180 1.4235 1.4290

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