GBP/USD: Potential move above 1.37 to prove a selling opportunity


The GBP/USD pair has been advancing amid bond-related dollar weakness and BoE hawkishness but the initial surge above 1.37 may prove short-lived despite good reasons to rise, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“GBP/USD received a dual boost on Tuesday. First, Bank of England Governor Andrew Bailey stated that negative interest rates are ‘controversial’ – seeming to put the discussion to rest. The second booster came from a ten-year Treasury auction in the US. Investors were eager to purchase American debt in a reversal from the sell-off in previous days. Investors have also taken note of the UK's accelerated vaccination campaign.”

“Coronavirus continues hitting the UK hard – with hospitals using more and more ventilating machines for severely ill patients. Wednesday's data may prove more worrying.”

“While the EU and the UK agreed on how to manage goods, they left the larger services sector to future talks. These negotiations begin on Wednesday with little appetite from Brussels to make concessions on finance – Britain's critical export sector. Any acrimony could hurt the pound.” 

“In the US, a 30-year bond auction is scheduled for later in the day, and if demand is not as high as in the previous one, the dollar could rise.”

“Federal Reserve officials Lael Brainard and Richard Clarida are scheduled to speak late in the day and they could repeat the message that tapering the bank's Quantitative Easing scheme is not on the cards. Nevertheless, the mere talk of reducing more money printing rather than expanding it could be dollar-positive.” 

“GBP/USD continues trading in an upwards channel and is nearing the 2021 peak of 1.3705 – also the highest since 2018. While momentum on the 4-hour chart is positive, the Relative Strength Index is hitting the 70 level – entering overbought conditions. That may result in a downside correction.”

 

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

AUD/USD keeping its head above 21DMA at 0.7673 for now

AUD/USD saw downside during Monday’s Asia Pacific and early European session, dropping momentarily as low as 0.7660. The pair broke below an uptrend linking the 28 December 2020 high with the 4, 11 and 15 January lows.

AUD/USD News

EUR/USD:Falling wedge on 4H tests bearish impulse below 1.2100

EUR/USD portrays choppy trading moves between 1.2075 and 1.2080 during Tuesday’s Asian session. Bullish chart pattern, recovering MACD keep buyers hopeful. Early February lows, 61.8% Fibonacci retracement add to the downside filters.

EUR/USD News

XAU/USD fades recovery moves below $1,850, awaits fresh clues

Gold eases from the top of an immediate $10 trading range while declining to $1,837 at the start of Tuesday’s Asian session. The yellow metal took a U-turn from the lowest since December 01 the previous day as the US dollar stepped back after refreshing the one-month high.

Gold news

Stellar awaits a massive breakout but remains inside a no-trade zone

XLM has continued to trade sideways since we last reported about it. The digital asset remains locked inside a tightening range which will eventually burst. 

Read more

US Dollar Index: Immediately to the upside comes 91.00

DXY extends the march north and already trades at shouting distance from the 91.00 barrier, or new 2021 highs.

US Dollar Index News

Forex MAJORS

Cryptocurrencies

Signatures