GBP/USD advances amid US dollar weakness, shrugging off concerns

GBP/USD is trading above 1.23, edging higher amid US dollar weakness and Britain's gradual reopening. Intensifying Sino-American tensions and the Brexit impasse are ignored. 

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Technical Overview

From a technical perspective, the pair needs to decisively break through the 1.2360-75 confluence hurdle before traders start positioning for any further near-term appreciating move. The mentioned region comprises of 200-period SMA on the 4-hourly chart and 50% Fibonacci level of the 1.2644-1.2076 downfall. A convincing breakthrough will set the stage for a move beyond the 1.2400 mark, towards testing 61.8% Fibo. level around the 1.2430-40 supply zone.

On the flip side, immediate support is pegged near the 38.2% Fibo. level, around the 1.2300-1.2290 region, which if broken might turn the pair vulnerable to slide back towards challenging the 1.2200 mark. The mentioned level coincides with 23.6% Fibo. level, which if broken might be seen as a fresh trigger for bearish traders. Some follow-through weakness below the 1.2180-70 horizontal support will reinforce the bearish bias and accelerate the fall back towards the 1.2100 mark en-route multi-week lows, around the 1.2075 region.

Fundamental Overview

The GBP/USD pair regained positive traction on Thursday and reversed a major part of the previous day's negative move. The British pound remained depressed through the first half of Thursday's trading action and was pressured by some dovish comments by the Bank of England (BoE) policymaker Michael Saunders. Speaking about monetary policy, Saunders argued that it was less risky to ease the policy too much in the current environment and also did not rule out the possibility of negative interest rates. This comes on the back of fresh Brexit jitters and took its toll on the sterling, albeit the emergence of some fresh US dollar selling pressure extended some support to the major.

The optimism over a potential COVID-19 vaccine remained supportive of the upbeat market mood and continued denting the greenback's relative safe-haven status. The USD bulls failed to gain any respite from Thursday's mixed US economic releases, which showed that the US economy contracted by 5% annualized rate during the first quarter of 2020 as compared to 4.8% estimated previously. Adding to this, the Initial Weekly Jobless Claims came in at 2.12 million as against 2 million expected. Meanwhile, Durable Goods Orders fell less than anticipated and came in to show a decline of 17.2% in April, though did little to impress the USD bulls.


The pair rallied over 100 pips intraday and finally settled just a few pips below session tops, comfortably above the 1.2300 mark. The momentum extended through the Asian session on Friday, rather unaffected by concerns about a further escalation in diplomatic tensions between the United States and China. It will now be interesting to see if the pair is able to capitalize on the positive move or runs into some fresh supply at higher levels as the focus now shifts to the US President Donald Trump's news conference regarding China's move to tighten control over the city of Hong Kong. It is worth recalling that China’s parliament on Thursday endorsed a national security law for Hong Kong.

There isn't any major market-moving economic data due for release from the UK and hence, the pair remains at the mercy of the USD price dynamics. Later during the early North American session, a slew of US economic releases will be looked upon for some trading impetus. Friday's US economic docket features the release of Core PCE Price Index, Personal Income/Spending data and Goods Trade Balance figures, which will be followed by Chicago PMI and revised Michigan Consumer Sentiment Index.


Big Picture

GBP/USD Bullish Themes



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Influential Institutions & People for the GBP/USD

The Pound VS Dollar can be seriously affected by news or the decisions taken by two main central banks:

The Bank of England is the central bank of the United Kingdom. Established in 1694 and privately owned in the beginning, the Bank was nationalised in 1946 so now is completely owned by the UK government. BOE's main reason to be is to maintain monetary and financial stability in the country. Some of its other tasks are producing secure bank notes, operating asset purchase facility and keeping the inflation low and stable. The bank is overseen by the Court, named used to reffer the board of directors, and is accountable to Parliament and the public.

On the other hand we found The Federal Reserve System (Fed) wich is the central banking system of the United States. Fed has two main targets: to keep unemployment rate to their lowest possible levels and inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth.

Andrew Bailey

Andrew Bailey is Governor of the Bank of England since 16 March 2020. He was announced as the new Governor of the BoE on 20 December 2019. Bailey was born in Leicester in 1959 and graduated from Queens' College with a BA in History and a PhD from the Faculty of History, University of Cambridge in 1985. Before becoming the Governor of the BOE, Andrew worked at the Bank in a number of areas, most recently as Executive Director for Banking Services and Chief Cashier, as well as Head of the Bank's Special Resolution Unit (SRU). Previous roles include Governor's Private Secretary, and Head of the International Economic Analysis Division in Monetary Analysis.

Jerome Powell

Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.




The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. The pair is also called 'The Cable', referring to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term originated in the mid-19th century, which makes it one of the oldest currency pairs.

Pound Dollar represents two economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, this pair has been suffering some turbulence due to risk related with the abandonment process from the European Union.

Related pairs


The EUR/USD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity of Euro Dollar is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EUR/USD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.

Normally, the EUR/USD is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online.


The USD/JPY (or US Dollar Japanese Yen) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: EUR/USD, GBP/USD, AUD/USD, USD/CHF, NZD/USD and USD/CAD. Japanese Yen has a low interest rate and is normally used in carry trades. This is the reason why is one of the most trades currencies worldwide. In the USD/JPY the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.

Trading the USD/JPY currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when referred to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is due to the fact that both currency pairs also use the US Dollar as the base currency, such as USD/JPY. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.