- GBP/USD has turned higher as the dollar takes a breather from gains.
- Britain's vaccination campaign and upgraded GDP support sterling.
- Wednesday's four-hour chart is pointing to further gains.
Rising from a better spot – a higher low is everything technical traders need to know to conclude that GBP/USD has turned a corner and is on the way up. This price action has its backing in fundamentals.
The most recent piece of good news from the UK was the upgrade of Gross Domestic Product statistics for the fourth quarter of 2020 – 1.3% against 1% originally reported. However, the primary driver for sterling's success is Britain's rapid vaccination campaign – which is bearing fruit.
Contrary to continental Europe – and also the US, despite its fast jabbing – COVID-19 cases and deaths are falling in the UK. That allows the government to proceed in its reopening program, and hopefully not have to unwind it.
On the other side of the pond, the US dollar has taken a breather from its gains as Treasury yields are off the highs. One of the drivers for the cooling in the bond sell-off comes from details of President Joe Biden's infrastructure plan. The Commander in Chief plans to raise taxes to fund his grand $2+ trillion expenditure, which implies less debt issuance, thus higher values for bonds – lower yields which are negative for the dollar.
However, the strength of the US economy – even before Congress gets to debate the plan – continues supporting the greenback. The Conference Board's Consumer Confidence gauge shot to 109.7 points in March, smashing estimates. ADP's labor report is set to show an increase of over half a million jobs.
ADP Private Payrolls March Preview: Consumers look to an early spring?
All in all, the balance on the dollar has tilted to the downside, while sterling remains upbeat. That may allow cable to extend its gains.
GBP/USD Technical Analysis
The four-hour chart is pointing to higher lows, as mentioned earlier. Pound/dollar bottomed out above 1.37 and crossed the 50 Simple Moving Average on its way up, while flipping momentum to the upside. All in all, bulls are gaining ground.
Cable is still battling 1.3780, which was a support line in early March. It is followed by 1.3820, a swing high that was seen last week, followed by 1.3850, a high point early in the week and where the 100 SMA hits the price.
Support awaits at 1.3735, which capped GBP/USD last week. It is then followed by 1.37 and finally by 1.3670, the March low.
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 holds above 1.0700 ahead of US jobs report
EUR/USD stays in a consolidation phase above 1.0700 after closing the previous two days in positive territory. Investors eagerly await April jobs report from the US, which will include Nonfarm Payrolls and Unemployment Rate readings.
GBP/USD advances to 1.2550, all eyes on US NFP data
The GBP/USD pair trades on a stronger note around 1.2550 amid the softer US Dollar on Friday. Market participants refrain from taking large positions as focus shifts to April Nonfarm Payrolls and ISM Services PMI data from the US.
Gold remains stuck near $2,300 ahead of US NFP
Gold price struggles to gain any meaningful traction and trades in a tight channel near $2,300. The Fed’s less hawkish outlook drags the USD to a multi-week low and lends support to XAU/USD ahead of the key US NFP data.
XRP edges up after week-long decline as Ripple files letter in reply to SEC’s motion
Ripple filed a letter to the court to support its April 22 motion to strike new expert materials. The legal clash concerns whether SEC accountant Andrea Fox's testimony should be treated as a summary or expert witness.
US NFP Forecast: Nonfarm Payrolls gains expected to cool in April
The NFP report is expected to show that the US economy added 243,000 jobs last month, sharply lower than the 303,000 job creation seen in March. The Unemployment Rate is set to stay unchanged at 3.8% in the same period.