British Pound Forecast: GBP/USD Rally Running Into Resistance
- UK preparing to ‘live with covid’ according to one UK minister.
- Cable is finding 1.3600 tough to breakthrough.
According to one Cabinet Minister, Michael Gove, the UK is preparing plans to live with covid but needs to balance this off against protecting the National Health Service. Mr. Gove said that the Prime Minister and Health Secretary would decide whether to cut the covid isolation period from seven days to five days, saying that they would be led by science. The Cabinet Minister told BBC Radio 4, ‘So, guided by science, we can look to the progressive lifting of restrictions, and I think for all of us the sooner the better. But we’ve got to keep the NHS safe’.
Cable continues its multi-week ‘V-shaped’ recovery and is now battling with resistance around the 1.3600 level. Just above here, there are two prior swing lows and one swing high at 1.3610 to navigate, while cable is also trading either side of the multi-month downtrend off the June 1 high at 1.4242. If 1.3610 is broken convincingly then cable has the room to move back to 1.3700 with little technical resistance to hold it back.
On the macro front there is little in the way of important UK data until the end of the week when the latest GDP 3-month average, expected at 0.8%, and Y-o-Y figure, expected at 7%, are released at 7:00 GMT. Keep up to date with all market-moving data releases and events by using the DailyFX Calendar
GBP/USD Daily Price Chart – January 10, 2022
Retail trader data show 44.30% of traders are net-long with the ratio of traders short to long at 1.26 to 1. The number of traders net-long is 7.53% higher than yesterday and 15.54% lower from last week, while the number of traders net-short is 6.34% higher than yesterday and 34.38% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.
What is your view on GBP/USD – 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.