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  • GBP/USD gained strong positive traction on Wednesday and shot to fresh multi-year tops.
  • Slightly overbought RSI on hourly charts capped gains amid a modest intraday USD rebound.
  • The set-up still favours of bullish traders and supports prospects for further near-term gains.

The GBP/USD pair built on the overnight bullish breakout momentum through the 1.3755-60 congestion zone and shot to the highest level since April 2018 on Wednesday. The momentum stalled pushed the pair to levels just above mid-1.3800s, though a modest intraday US dollar rebound capped the upside.

Against the backdrop of expectations for a massive US fiscal spending plan, the prevalent risk-on mood provided a modest lift to the US Treasury bond yields. This, in turn, was seen as a key factor that extended some support to the greenback and kept a lid on any further gains for the GBP/USD pair.

Apart from this, slightly overstretched RSI on hourly charts further held bullish traders from placing fresh bets. However, technical indicators on the daily chart are still far from being in the overbought territory and support prospects for an extension of the post-BoE strong positive momentum.

Hence, any meaningful pullback might be seen as an opportunity to initiate fresh bullish positions and remain limited near the 1.3760-55 resistance breakpoint. The GBP/USD pair seems poised to climb further beyond the 1.3880 intermediate resistance and aim to reclaim the 1.3900 round-figure mark.

That said, a sustained break below the mentioned resistance-turn-support might prompt some technical selling and accelerate the slide back towards the 1.3700 mark. This is closely followed by support near the 1.3680 horizontal zone, which if broken will negate the near-term constructive outlook.

GBP/USD 4-hourly chart

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Technical levels to watch