British Pound Technical Analysis: GBP/USD Pullback Grinds Support
British Pound, GBP, GBP/USD Price Analysis:
- The US Dollar has put in a very strong push since the Thursday lows – and for traders looking to fade that move, the long side of GBP/USD may be attractive.
- USD-weakness has been a dominant theme in markets since last March – and the latter-portion of last week brought a counter-trend bump in that theme. But given timing, this may have been month-end flows, so for those looking at bearish USD-themes, GBP/USD can remain of interest.
- The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
The British Pound has so far enjoyed a very strong start to the year, even as the country continues to grapple with lockdown-driven economic pressure. But, the pace of vaccine rollout has been encouraging, especially if compared to mainland Europe, and this has helped to drive some optimism through the British Pound.
Against the US Dollar, the British Pound blew through a key price last week when launching above the 1.4000 psychological level. And bulls didn’t stop there, either, as buyers continued to push all the way up to 1.4243, where price action began to pullback ahead of the 4250 psychological level.
Since spiking up to that fresh high last Thursday, prices have been pulling back, eventually finding a bit of support around the 1.3900 level. That’s so far helped to stabilize price action, keeping the door open for bullish continuation scenarios in the pair.
What makes this setup so interesting is just how consistent the bullish trend has priced in since late-September, as can be seen below in the trend channel that’s held the bulk of price action over the past few months.
GBP/USD Daily Price Chart
Going down to a shorter-term chart, and we can see buyers grasping for support around that 1.3900 level. This can keep the door open for bullish continuation scenarios for trend-based strategies, looking for prices to move back towards a re-test of the 1.4000 psychological level.
GBP/USD Two-Hour Price Chart
Chart prepared by James Stanley; GBPUSD on Tradingview
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
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