British Pound (GBP) Outlook: Further Gains Likely for GBP/USD
GBP price, news and analysis:
- GBP/USD continues to rise, largely on the persistent weakness of the US Dollar, with few signs yet of a pullback.
- The strength of currencies like GBP and EUR against the US Dollar comes at a time when traders are torn between continuing stimulus measures and ongoing US-China tensions.
GBP/USD outlook still positive
The ongoing weakness of the US Dollar, which has fallen steeply since the start of July, is continuing to boost currencies like the Euro and the British Pound. With the upward trends in both EUR/USD and GBP/USD secure, the two pairs look likely to rise further, although near-term consolidation cannot be ruled out first.
As the chart below shows, the relative strength index (RSI) for GBP/USD is not yet in overbought territory and the pair looks to be stable above the 1.27 level.
GBP/USD Price Chart, One-Hour Timeframe (July 17-23, 2020)
Chart by IG (You can click on it for a larger image)
The weakness of the US Dollar comes at a time when global markets are torn between continuing measures by central banks and governments to boost their economies after the damage caused by the coronavirus pandemic, and ongoing tensions between the US and China.
On that front, the US has ordered China to close its consulate in Houston, Texas, and China has responded by calling the move an “unprecedented escalation” of their dispute and said it is considering closing the US consulate in Wuhan in retaliation.
However, European stock indexes – including London’s FTSE 100 – are modestly firmer in early Thursday trading despite comments by US President Donald Trump that more consulate closures are “always possible”.
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--- Written by Martin Essex, Analyst and Editor
Feel free to contact me via Twitter @MartinSEssex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.