GBP/USD Price Looks Promising to Gain Above 1.37, USD Weakens

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  • GBP/USD managed to stall the bears and move up 100 pips. 
  • COVID spread is not affecting badly anymore. 
  • Brexit concerns can still haunt but US inflationary pressure can counterbalance the situation. 

The GBP/USD price stopped depreciation on Wednesday and raised around 100 pips on the day. We talked about this in recent days. It should be understood that the pandemic factor is important, but the markets cannot only trade according to it.

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Traders have not often guided their trading decisions solely by COVID morbidity and mortality throughout the coronavirus pandemic. They were much more interested in fundamental global factors, not even macroeconomics. Thus, the three-day downward rally of the pound sterling could not continue. But, of course, this is the market. No one can say with absolute certainty that the Pound Sterling will no longer fall again.

Nevertheless, the global technical factor indicates that the max downfall has already exceeded. Although at the moment, the GBP/USD pair is ideally in the range that we have called in recent weeks at 1.3600 – 1.3666. Therefore, we expect that the pair will start a new round of an upward movement from this range, moreover, a long-term one. From our point of view, the US Dollar has already risen in price, and its further strengthening is unlikely.

In the UK, a new round of growth in the number of cases of the disease may well begin, which may force the markets to again resort to the Pound selling. However, “coronavirus” is not the only problem in the UK at this time.

Recall that relations between the EU and the UK continue to deteriorate after David Frost openly stated that he requires a revision of the “Northern Ireland Protocol”, and representatives of the European Commission replied that this would not happen. Thus, it turns out to be a rather stalemate. Great Britain, which still fears new unrest on the island of Ireland, is trying to soften the “Northern Ireland Protocol” action as much as possible so that the Irish have no reason to worry.

In general, the UK, as usual, has been at the very center of events in recent years. On one hand, these events are clearly negative for the Kingdom. But, on the other hand, the inflationary factor of the money supply in the United States can easily cover all these negative aspects which are now far from the concept of “warm”.

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GBP/USD price technical analysis: More bulls ahead!

The GBP/USD price managed to find a bottom just under 1.3600 level and lifted back above the 1.3700 area. The price is still lying below the 50-period SMA on the 4-hour chart. However, it remained successful in sustaining beyond the 20-period SMA on the same chart. The volume is clearly bullish now. Further action can be seen during the London session.

GBP/USD price on 4-hour chart

GBP/USD price on 4-hour chart

Support levels:

S1 – 1.3672

S2 – 1.3611

S3 – 1.3550

Resistance levels:

R1 – 1.3733

R2 – 1.3794

R3 – 1.3855

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About Author

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.