- Apparently, there is no sound reason for the rise in GBP/USD.
- Extending the fourth wave of virus can weigh on the Pound.
- Overall, the scenario is in the favor of Pound bulls.
- US CPI can give a boost to the British Pound.
On Monday, the GBP/USD analysis tells that the price only managed to roll back a little downward, giving hope for the US Dollar’s recovery that suffered undeservedly on Friday, when the pair resumed its rally immediately.
Even though there was no important macroeconomic statistics and base for a rise on Monday. It is unlikely that traders reacted this way to England’s defeat in the UEFA EURO 2020 final.
-Are you interested in making money in forex? Check our detailed guide-
We may see the resumption of rally in European currencies against the Dollar. However, the Pound Sterling again shows such movements that it’s just right to grab our heads and ask each other: “what is happening?”.
Of course, we hope that the movement will calm down and be more logical and reasonable. Unfortunately, however, it looks like the opposite will be true. In the meantime, a concrete decision on July 19 is expected from the British government. Recall that on July 12, the British Parliament was supposed to meet to decide on the complete lifting of all quarantine restrictions in the country from July 19.
Based on the preceding, we can conclude that whatever the pandemic and economic situation in the UK will not negatively impact the Pound Sterling. On the contrary, the British currency can quite calmly rise against the Dollar, even if the fifth “wave” of the epidemic begins in Britain and a new strain appears, which will not be found anywhere else.
Moreover, the British economy has been feeling pretty bad over the past year and a half, which does not prevent the British currency from continuing to grow.
In just the last year and a half, the British Pound has risen by 2800 pips, and the maximum correction was about 500 pips. Thus, we continue to await the renewal of the April 2018 highs and remind once again that it seems the factor of injecting huge amounts into the US economy plays the most important role in the depreciation of the Dollar and the Pound’s strength. Thus, there will be literally a few reports this week to watch out for.
Today, the US consumer price index will be published, which theoretically could cause a new fall in the US Dollar since inflation is now very high in the country, and any further higher inflation is bad for the Dollar.
-Are you looking for automated trading? Check our detailed guide-
GBP/USD technical analysis: What comes next?
The GBP/USD price is locked between 50 and 200 SMAs on the 4-hour chart. Despite a recent bull run, the pair technically lacks the steam to break the upside. Volume is not supporting any buying momentum at the moment. We may find a clear buying opportunity after the US CPI figures.
Support levels:
S1 – 1.3855
S2 – 1.3824
S3 – 1.3794
Resistance levels:
R1 – 1.3885
R2 – 1.3916
R3 – 1.3947
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Share
Saqib Iqbal
