Everyone wanted a piece of the Pound on Monday as signs the U.K and European Union were close to a trade deal quelled fears around a no-deal Brexit.
More positive news on the vaccine front boosted buying sentiment towards the currency, sending the GBPUSD as high as $1.3397 - its best level in over two months.
It is becoming clear that the British Pound has been one of the main winners of growing optimism for vaccines which would jumpstart the services driven U.K economy. Rising hopes of the U.K. and EU finding a middle ground on trade and Rishi Sunak’s pledge to support growth with more borrowing are likely to push the currency higher in the near term.
However, the medium to longer-term outlook remains clouded by the second national lockdown, the risk of a double-dip recession and lingering fears over the UK leaving the EU with no deal despite the growing optimism.
Back to the technicals, the GBPUSD is pushing toward the upper end of the near 30-month range on the monthly timeframe. The last time prices secured a monthly close above the 1.3500 level was back in April 2018. Should bulls find enough strength to conquer this tough resistance, the GBPUSD has the potential to test 1.4300.
On the weekly charts, it is the same old story. Prices are bullish as there have been consistently higher highs and higher lows while the MACD trades to the upside. Bulls have enough breathing room to maneuver above the 1.3100 higher low. If prices are unable to keep above the 1.3300 support, a technical retracement towards 1.3250-1.3200 could be on the cards before bulls re-enter the scene.
Zooming into the daily charts, the GBPUSD is trading within a bullish channel while prices are hugging the outer skin of the Bollinger bands – signalling a trend. A solid daily close above 1.3400 could open a clean path towards 1.3500. Sustained weakness below 1.3400 is likely to trigger a decline back towards the 1.3250 regions in the near term.
Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.