GBP/USD Forecast: Resistance is futile, sterling set to succumb to dollar strength
Back to school day in the UK serves as a battle cry for pound bulls – which are fighting the might of King Dollar. Britain's first stage of reopening is a boost to the economy as parents will now be able to work more easily at home, without interruption from their kids. The nation also benefits from its rapid vaccination campaign – one in every three Brits has received protection against COVID-19, and younger age groups are now being included.
A third factor supporting sterling comes from the Bank of England. Governor Andrew Bailey reiterated his position that the outlook is positive and stressed that work toward negative rates does not imply they are soon on the cards. Read more...
GBP/USD hit the buying opportunity at 1.3820/00
GBPUSD holding below 1.3820 today is a medium term sell signal targeting1.3780/70 then 1.3715/05. Gains are likely to be limited in what could be a developing bear trend. Minorresistance at 1.3890/1.3900. Unlikely but a break higher meets strong resistance at1.3950/60.
EURGBP minor resistance at 8660/70 then key resistance at 8700/8710. A breakabove 8730 however targets 8750/60, perhaps as far as resistance at 8790/8800. Failure to beat 8660/70 targets 8630/20, perhaps as far as 8595/85 (hit last week). A break lower targets 8560/50 with a break below 8540 acting as the next sell signal. Read more...
Weekly technical and trading outlook – GBP/USD
GBP/USD - 1.3855.. Sterling remained on the back foot last week, price met renewed selling at 1.3999 Mon n extended recent decline to 1.3860 Tue. Despite a short-covering rise to 1.4017 (Thur), price tumbled to 1.3779 in NY Fri.
On the bigger picture, despite cable's brief break of 2016 post-Brexit low of 1.1491 to a near 35-year trough of 1.1412 in mid-Mar 2020 on safe-haven usd's demand following free fall in global stocks, sterling's rally to as high as 1.2812 (Jun) on broad-based usd's weakness, then to an 8-month peak of 1.3482 in Sep suggests a major bottom is in place. Although cable rallied strongly to 1.3686 on the last trading day of 2020 following a last-minute EU-UK trade deal, then to a 34-month peak at 1.4241 in late Feb, subsequent fall to 1.3779 last Fri signals top is made n stronger retracement to 1.3636, then twd 1.3566 is envisaged. Only abv 1.4017 signals 1st leg of correction over, 1.4120/30. Read more...
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