|

GBP/USD Forecast: Three reasons for the big breakout above 1.40, next levels to watch

  • GBP/USD has surged above 1.40, hitting levels last seen in February. 
  • Scotland's elections, the UK accelerated reopening and weak US jobs figures are being the move. 
  • Monday's four-hour chart is showing cable is nearing overbought conditions. 

The triple-top has been breached – finally – and GBP/USD is now trading above the psychological barrier of 1.40 and at the highest February 25, roughly ten weeks ago. There are three main upside drivers for the currency pair, which could continue underpinning its rally.

1) Scotland

The Scottish National Party (SNP) won the regional elections north of the border but fell short of an absolute majority. While it continues pushing for a new independence referendum – backed by the pro-plebiscite Greens – its lack of a sweeping victory has resulted in some relief for sterling.

Moreover, the ruling Conservatives won a closely watched by-election in Hartlepool, cementing their grip on power and providing additional political stability.

2) Reopening

UK Prime Minister Boris Johnson is set to deliver a statement announcing new measures related to Britain's reopening. The vaccination campaign has dramatically cut COVID-19 cases and some speculate that the government could accelerate the timeline for reopening. 

Over half of the population received at least one jab and roughly a quarter have been given the second dose as well. In the US, the pace has been slowing down. UK growth figures are awaited next week. 

3) Nonfarm Payrolls shocker

American hiring fell far short of expectations – only 266,000 jobs were added in April, against nearly one million expected. While seasonal adjustments may have been skewed due to the pandemic, the markets' verdict is clear – the Federal Reserve is in no rush to taper bond buying nor raise rates. The resulting sell-off in the dollar is extending to Monday. 

NFP Analysis: Terrible figures show overheating theory remains relevant only for stocks

Minnesota Fed President Neel Kashkari said the economy is still in "a deep hole." His colleague Charles Evans of the Chicago Fed speaks later in the day, while investors await inflation and consumer statistics later this week. 

Pound/dollar seems to have all the ingredients to extend its gains, at least fundamentally. 

GBP/USD Technical Analysis

The currency pair is benefiting from upside momentum on the four-hour chart and trades well above the 50, 100 and 200 Simple Moving Averages. On the other hand, the Relative Strength Index is nearing the 70 level – representing overbought conditions. 

The next level to watch on the upside is 1.4080, which provided support in late February. It is followed by 1.4140, a battle line, and then by 1.4180, a swing high before cable began its climbdown. The 2021 peak of 1.4240 is next.

Support is at 1.4010, the broken triple-top, followed by 1.3980, 1.3930 and 1.3860. 

April Nonfarm Payrolls fall far short of forecast but markets hardly notice

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:

Editor's Picks

AUD/USD seems vulnerable near 0.6800, 10-month low amid bullish USD

AUD/USD languishes near a 10-month low during the Asian session on Friday, awaiting a break below 0.6800 before the next leg up amid a bullish US Dollar. Firming Fed rate-hike expectations, along with fading hopes for US-Iran diplomacy, help the USD hold gains at its highest level since April 2025. Moreover, the RBA’s dovish tilt undermines the Aussie and backs the case for further losses.

USD/JPY bulls turn cautious near 160.00 amid intervention risks

USD/JPY enters a bullish consolidation phase around its highest level since early September as bulls turn cautious amid intervention risk near 160.00. Meanwhile, the downside seems cushioned as the wide US-Japan interest rate gap keeps the Yen carry trade active. Furthermore, the possibility of a jumbo Fed rate hike and Middle East uncertainties hold the US Dollar near a 19-month top, supporting the currency pair.



Gold remains on the back foot below $3,900

Gold now alternates gains with losses below the $3,900 mark per troy ounce on Friday. The precious metal struggles to regain traction amid the firmer US Dollar, mixed US Treasury yields and expectations of further tightening by the Fed at its December meeting.

Bitcoin just posted five straight losing weeks, and the storm may not be over yet

Bitcoin is struggling to find support, slipping below $70,000 as multiple headwinds threaten to push the Crypto King lower. The much-anticipated “Uptober” rally failed to materialize, with persistent selling pressure and widespread liquidations instead reinforcing the “Rektober” narrative.

Week ahead – Fed Minutes, inflation data and Nvidia earnings to guide investors

Fed minutes may add to hawkish tone as bets of 50-bps hike grow. Nvidia to report earnings as bar to impress high after spy scandal. Trade and geopolitics to be focal point of Trump-Xi summit.

Gold hit its lowest level of 2026 near $3,850
Gold (XAU/USD) attempts to stabilize around $3,890 on Friday after falling to $3,852 on Thursday, its lowest level since October 2025. The precious metal has lost more than 4% this week, as investors increasingly anticipate further monetary tightening from the Federal Reserve (Fed). The latest decline reflects a sharp change in market expectations.