Next up 1.30 as GBP/USD moves to its highest level in 4 months and 13 days

• In another impressive session, GBP/USD rises 0.50% higher.
• The price of the pair looks set to hit 1.30 with the next major resistance much higher up.

Fundamental backdrop

GBP/USD is on a great run on Tuesday as the pair pushes around 0.50% higher. After some time where the EUR took centre stage the pound has now come back with full force. One of the key stories of the sessions has been that The National Institute Of Economic and Social Research (NIESR) noted that they see the UK economy shrinking by only 10% in 2020. This goes against some much larger forecasts from other agencies.

The strength is very interesting as the Bank of England is considering negative interest rates and other research agencies have had very different predictions. There does not seem to be much thought of a second COVID-19 wave in this forecast. GBP has also been very sensitive to risk, but at the moment stocks have stalled and the GBP rally has continued. Maybe this relationship is starting to disconnect. 

GBP/USD daily chart

Looking at the chart below its clear to see the strength in GBP heading to the 1.30 level. The next resistance higher up is close to 1.32 but before that there is a congestion point at the median value area of the old consolidation area at around 1.2992. 

The indicators are understandably bullish as the Relative Strength Index is firmly in the overbought area. The MACD signal lines are extended to the upside and the histogram is also in the green. 

Additional levels