Pound Dollar Setup: Bullish GBP/USD Above 1.354
GBP/USD Talking Points:
- The British Pound has bounced off of a critical zone of support, makes its way towards short-term trendline resistance
- While there has been a slight pullback in prices, Cable (GBP/USD) remains above prior channel resistance turned support
- Fundamental factors may provide an additional catalyst for price action
Taking into account the current economic backdrop of both major currencies, the BoE interest rate decision in December and a high number of vaccinated individuals has allowed Cable to establish a relatively consistent upward trend.
With markets now pricing in expectations of a March rate hike, next week’s Fed interest rate decision (26 Jan) and a potential vote of no-confidence for Prime Minister Boris Johnson may provide an additional catalyst for short-term price action.
Should the Federal Reserve decide to tighten policy sooner than expected or a vote of no confidence is called, GBP/USD strength may subside, at least temporarily.
From a technical standpoint, a hold above 1.3540 (the break of prior channel resistance) leaves the door open for a move up towards 1.3684. If that level is broken, bulls may be set to retest the two month high at the key psychological level of 1.3750 after which upward momentum may prevail up to the 14.4% Fibonacci level of 1.3844.
GBP/USD Daily Chart
Chart prepared by Tammy Da Costa using TradingView
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.