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Sterling (GBP) Weekly Forecasts: GBP Supported by Covid Vaccination Hopes

Sterling (GBP) Weekly Forecasts: GBP Supported by Covid Vaccination Hopes

Nick Cawley, Strategist

Sterling (GBP/USD and EUR/GBP) Price, Analysis and Charts:

  • GBP/USD – Two steps forward, one step back.
  • EUR/GBP continues to press against multi-month support.

The British Pound nudged higher over the week across the board and this pattern is expected to continue in the weeks ahead as traders watch the UK’s Covid-19 vaccination plan to see if the government’s ambitious targets can be met. Inflation data (January 20), retail sales figures and the latest PMIs (January 22) will also be watched, especially in the light of today’s slightly better-than-expected monthly GDP release.

Technical vs Fundamental Analysis in Foreign Exchange

A look at the weekly GBP/USD chart shows how Sterling has improved against the US dollar over the last nine months after hitting a spike low of 1.1412 in March last year. The performance since late-September has been fairly consistent with a ‘two steps forward, one step back’ set-up with the pair producing five red candles and 12 green candles over the last four months. The 20-day simple moving average has broken above both the 50- and 200-day sma since then, supporting the pair’s rally. As long as the pair keep above 1.3515 and stay within the basic uptrend channel, then further advances are likely big figure resistance at 1.4000 the short- to medium-term target for now.

GBP/USD Weekly Price Chart (November 2014 – January 15, 2021)

GBP/USD

The EUR/GBP weekly chart also shows an interesting set-up with the pair respecting support around the 0.8856 again, a level that has held since early-June. This week’s candle, however, did break below both the 20- and 50-day simple moving averages suggesting bearish sentiment is taking hold of the pair and a further re-test of support is likely. The 200-day sma is just below this horizontal support level and a break and open below both over the next couple of weeks could see EUR/GBP fall further with 0.84725 the next line of horizontal support.

EUR/GBP Weekly Price Chart (November 2015 - January 15, 2021)

EUR/GBP

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What is your view on Sterling – 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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