Search ForexCrunch

During the first half of the London session, the dollar remained under broad selling pressure, pushing the GBP/USD price closer to monthly highs above 1.3800 in the final hour.

-If you are interested in forex demo accounts, check our detailed guide-

On Tuesday, the GBP/USD pair drew several new buy orders after a slight decline yesterday. The pair has recovered a substantial amount since hitting the level of 1.3400 at the end of September. The move was fueled by aggressive selling around the US dollar and marked the fourth day of positive movement in the past five days.

A sharp decline in US Treasury bond yields and dismal US industrial production data, which showed the sharpest decline in almost seven months, hurt the dollar overnight. Furthermore, the prevailing flow of risk pushed the US dollar to a three-week low, a key reason for the strong rally in the GBP/USD pair.

Meanwhile, the US dollar’s ongoing losses suggest that markets have fully anticipated the Fed’s upcoming tightening. In case you missed it, the FOMC meeting published last Wednesday confirmed that the Fed will continue to cut its massive incentives through the end of 2021.

On the other hand, the pound benefited from recent aggressive remarks from Bank of England officials signaling a rate hike later this year. According to Andrew Bailey, the Bank of England must act due to mounting risks to inflation expectations in the medium term.

In the absence of any relevant economic news from either the UK or the US, the persistent out-of-bound moves are seen as a new trigger for bullish traders and create the conditions for additional profits.

Traders, however, can be guided by speeches scheduled by Bank of England Governor Andrew Bailey and Bank of England Chief Economist Catherine Mann for some fresh momentum. Also, comments from Fed chief Michelle Bowman could affect dollar momentum and create some short-term trading opportunities.

GBP/USD price technical analysis: Bulls to aim for 1.3910

GBP/USD 4-hour price chart

The GBP/USD price managed to surge above the 1.3800 handle. The price is well above the key moving averages on the 4-hour chart. Moreover, the 50-period and 200-period SMAs will make a bullish crossover which indicates further gains on the cards. The recent rally may find resistance around 1.3850 which is a key orderblock zone ahead of 1.3910, a swing high area of Sep 09.

-If you are interested in Islamic forex brokers, check our detailed guide-

On the downside, 1.3740 (20-period SMA) will provide initial support ahead of 1.3700 (psychological support and round number). The volume data favors a bullish move for now.

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.