|

GBP/USD Forecast: Sterling set to extend gains as Brexit, vaccines and BOE are all pound-positive

  • GBP/USD has been rising as the safe-haven dollar retreats from its highs.
  • Optimism about the NI protocol, Britain's vaccine milestone and bullish BOE comments may boost sterling. 
  • Monday's four-hour chart is pointing to more gains for cable.

Another day, another scandal for UK Prime Minister Boris Johnson, who allegedly said he would prefer seeing bodies pile up than impose a new lockdown – a claim Downing Street strongly denies. For sterling, Johnson's Brexit actions matter more and they are pound-positive. 

The EU and the UK are reportedly negotiating a quid pro quo deal on dealing with trade in Northern Ireland. Brussels has made new offers to London, potentially allowing for a breakthrough that could resolve issues and allow for more fluid commerce. While COVID-19 is the overwhelming economic issue, leftovers from Brexit remain a drag on the British economy and any progress could add another boost.

Sterling benefited from Britain's rapid immunization effort, which hit a significant milestone – over 50% of the population received at least one jab. This headline, alongside the ongoing fall in cases, is helping the pound despite worries about India's out-of-control covid situation. The UK, the US and other countries have offered aid – also of self-interest, as falling demand from Asia could hurt the global recovery.

Another reason to be bullish on the pound comes from the Bank of England. Deputy Governor Ben Broadbent said that he sees "very rapid" growth at least during the next couple of quarters. Will Britain's bounce-back match America's?

US Durable Goods Orders figures for March are due out on Monday, and economists expect a substantial increase of 2.5% after a fall in February. However, after the world's largest economy's statistics beat estimates in other releases, a faster growth rate cannot be ruled out. The publication feeds into Thursday's Gross Domestic Product data and is also watched by the Federal Reserve. 

The Fed is set to leave its policy unchanged and could begin laying the groundwork for reducing its bond purchases – something that would boost the dollar. However, the upbeat mood currently weighs on the greenback, which serves as a safe-haven currency. 

All in all, fundamentals point to further upside, at least on Monday.

GBP/USD Technical Analysis

Pound/dollar has recaptured the 50 Simple Moving Average (SMA) on the four-hour chart and momentum has nearly flipped to the upside. The Relative Strength Index (RSI) is significantly below 70, thus far from overbought conditions. 

Above the daily high of 1.3930, the next resistance line to watch is 1.3950, which held GBP/USD down last week. It is followed by 1.4010, the stubborn April high.

Support awaits at 1.3880, a swing high from last week, followed by 1.3860 and 1.3820. 

More GBP/USD Weekly Forecast: Taper tantrum? Powell may push sterling off the cliff

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to PremiumSign In

Author

Yohay Elam

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

More from Yohay Elam
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD rebounds after falling toward 1.1700

EUR/USD gains traction and trades above 1.1730 in the American session, looking to end the week virtually unchanged. The bullish opening in Wall Street makes it difficult for the US Dollar to preserve its recovery momentum and helps the pair rebound heading into the weekend.

GBP/USD steadies below 1.3400 as traders assess BoE policy outlook

Following Thursday's volatile session, GBP/USD moves sideways below 1.3400 on Friday. Investors reassess the Bank of England's policy oıtlook after the MPC decided to cut the interest rate by 25 bps by a slim margin. Meanwhile, the improving risk mood helps the pair hold its ground.

Gold stays below $4,350, looks to post small weekly gains

Gold struggles to gather recovery momentum and stays below $4,350 in the second half of the day on Friday, as the benchmark 10-year US Treasury bond yield edges higher. Nevertheless, the precious metal remains on track to end the week with modest gains as markets gear up for the holiday season.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid bearish market conditions

Bitcoin (BTC) is edging higher, trading above $88,000 at the time of writing on Monday. Altcoins, including Ethereum (ETH) and Ripple (XRP), are following in BTC’s footsteps, experiencing relief rebounds following a volatile week.

How much can one month of soft inflation change the Fed’s mind?

One month of softer inflation data is rarely enough to shift Federal Reserve policy on its own, but in a market highly sensitive to every data point, even a single reading can reshape expectations. November’s inflation report offered a welcome sign of cooling price pressures. 

XRP rebounds amid ETF inflows and declining retail demand demand

XRP rebounds as bulls target a short-term breakout above $2.00 on Friday. XRP ETFs record the highest inflow since December 8, signaling growing institutional appetite.