Sterling has seen its third consecutive session of gains last Friday, as a result of the weakening of the dollar and a MPC (Monetary Policy Committee) member, Kristin Forbes, voted to raise rate this month, despite Brexit uncertainty and risks on economy.
GBP/USD hits a three-week high against the dollar this morning, testing the significant resistance level at 1.2400, touching the intra-day high of 1.2435.
On the 4-hourly chart, the price has been trading above the downside uptrend line support, indicating the current trend remains bullish.
However, the pressure at the significant resistance at 1.2400 is heavy. In addition, both the daily and the 4-hourly Stochastic Oscillator readings are around 80, suggesting a retracement.
Be aware that the bullish momentum is likely to be restrained at this level. If the price could be held above the level, the uptrend will likely continue. Conversely, if the level is confirmed broken, we will like see a pull back.
The resistance level is at 1.2420, followed by 1.2435 and 1.2450.
The support line is at 1.2400, followed by 1.2380 and 1.2360.
The recent rebound of Sterling was helped by the MPC member’s vote on a rate hike. However, from a broader scope, the uncertainty associated with the Brexit procedure until the final Brexit deal is done, and the turmoil over a second Scottish referendum, is likely to pose downside risks on the UK economy and Sterling.
We will see the release of a series of UK inflation data for February, at 09:30 GMT on Tuesday. It will likely affect the strength of Sterling and Sterling crosses.