GBP/USD Forecast: Sterling set to surge above critical resistance, with additional shots in the arm
- GBP/USD has been benefiting from dollar weakness to advance toward 1.38.
- The possibility of mixing vaccines may strengthen Britain's resilience to supply shocks.
- Wednesday's four-hour chart is showing that cable is nearing critical resistance.
Mix and match – the experiment to combine doses from different COVID-19 vaccines is expanding from AstraZeneca and Pfizer to Moderna and Novavax. If it results in satisfactory immunization – or even greater protection – it could help Britain extend its vaccination campaign and prevent supply shocks from specific jabs. That is now the case in Europe.
Johnson & Johnson announced it is halting deliveries of its jabs to European countries following the US FDA's investigation into a potential link between rare blood clots and vaccines. The UK is already ahead in inoculating its population and satisfactory results from the trial could further boost it.
However, that development is only a minor upside driver for GBP/USD, which has mostly been benefiting from dollar weakness. The greenback has come under pressure after US inflation figures only met expectations – core prices were up 1.6% yearly in March – and failed to rally as some had anticipated. That means the central bank is in no rush to raise rates.
See US Inflation Analysis: Doomsday will wait, but second “sell the fact” on the dollar looks near
Jerome Powell, Chair of the Federal Reserve, is set to speak later in the day and he may laud these developments, reiterating his commitment to keeping rates low and supporting the economy.
The Fed described any upswing in inflation as temporary and wants to see more jobs created before tightening. Apart from Powell, three of his colleagues will also be speaking. The bank's Beige Book is also due out and will likely point to a recovering economy, as seen in various economic indicators.
All in all, GBP/USD has from to rise, amid both dollar weakness and sterling strength.
GBP/USD Technical Analysis
The four-hour chart is showing that cable has been rejected at 1.3810, a line that capped it twice in late March – making it a critical barrier. Momentum has turned to the upside and the currency pair surpassed the 50 and 100 Simple Moving Averages. All in all, bulls are gaining ground.
Above 1.3810, the next cap is at 1.3850, a swing high from late March, and then 1.3920.
Support awaits at 1.3780, a peak from last week, followed by 1.3750 and 1.37.
Author
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.
