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British Pound (GBP) - Positive Outlook Pushing GBP/USD Higher, Extending Last Week's Gains

British Pound (GBP) - Positive Outlook Pushing GBP/USD Higher, Extending Last Week's Gains

Nick Cawley, Strategist

British Pound (GBP) Price Outlook

  • GBP/USD continues last week’s rally.
  • EUR/GBP drifting back to 0.8600.

A mildly positive start to the week for the British Pound as it extends last week’s rally. The partial re-opening of the UK economy is giving Sterling a helping hand, while the latest vaccination data is helping to underpin the positive sentiment in the currency. The latest data show that nearly 42.8 million people have had at least one vaccination jab – around 64% of the UK population – while the number of deaths fell on Saturday to 10, one of the lowest figures recorded during the pandemic.

Looking at GBP/USD, the next level of resistance is at 1.3920, a prior pair of short-term high made earlier this month, before a cluster of prior highs between 1.4000 and 1.4020. The market will likely need a fresh driver to break above the later area of resistance, especially as cable is entering overbought territory – using the CCI indicator – but the overall chart set-up remains mildly positive.

GBP/USD Daily Price Chart (October 2020 – April 19, 2021)

British Pound (GBP) - Positive Outlook Pushing GBP/USD Higher, Extending Last Week's Gains

Retail trader data show 54.04% of traders are net-long with the ratio of traders long to short at 1.18 to 1. The number of traders net-long is unchanged than yesterday and 19.37% lower from last week, while the number of traders net-short is unchanged than yesterday and 17.93% higher from last week.We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall.The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.

EUR/GBP is drifting back towards the 0.8600 area after finding life difficult above 0.8700. While Sterling retains a positive outlook, the Euro remains neutral, something that can also be seen on the EUR/USD chart with 1.2000 seemingly a short-term line in the sand.

Euro May Turn Lower vs. US Dollar as Upswing Falters Below 1.2000

Support for EUR/GBP remains around 0.8600, aided by the 20- and 50-day simple moving averages currently at 0.8607 with little in the way of fundamental news to drive price action ahead of Thursday’s ECB meeting and Friday’s round of PMI releases.

EUR/GBP Daily Price Chart (September 2020 – April 19, 2021)

British Pound (GBP) - Positive Outlook Pushing GBP/USD Higher, Extending Last Week's Gains

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What is your view on GBP/USD and EUR/GBP – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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