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Talking Points:

- GBP/USD continues to gain after setting a fresh near-term low in early-March. The bounce in the pair has been working within a bullish channel that saw a topside breakout of the February bearish trend-line after the reveal of the UK spring statement.

- At this point, bulls have appeared to grow bashful just below the 1.4000 psychological level, helping to illustrate the importance of this price for near-term resistance. A break-above this level opens the door for topside setups, targeting prior areas of resistance around 1.4070, and 1.4142.

- Are you looking to improve your trading approach? Check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Want to see how traders are currently positioned in GBP/USD? Click here for GBP/USD Sentiment.

February Blues Lead to March Gains

The British Pound had a rough month of February, against both the US Dollar and the Japanese Yen. While GBP/JPY shed more than 1,000 pips in its down-side run, GBP/USD fell by a more modest but still impressive 500 from the first day of February to the first day of March. This is especially notable considering that the US Dollar wasn’t exactly burning-higher on any charts, as prices remain near those three year-lows despite an expanding range.

That low that was set in GBP/USD earlier in the month has led into a bullish channel with price action now fast re-approaching the 1.4000 psychological level. This included a top-side breakout yesterday of a bearish trend-line that had previously helped to hold the highs since late-January.

GBP/USD Four-Hour Chart: Bullish Channel, Bullish Breakout above Bearish Trend-Line

gbpusd four hour chart

Chart prepared by James Stanley

Bulls Get Shy Ahead of 1.4000

That bullish pattern has been tempered a bit over the past 24 hours as price action made a fast-approach towards the 1.4000 psychological level. After coming within pips of a re-test, prices have broken back down until finding a bit of support off of 1.3925; which is very near the 1.3930 resistance that we were following last week.

GBP/USD Hourly Chart: Bulls Shy Away From 1.4000, Support Shows around Prior Resistance

gbpusd hourly chart

Chart prepared by James Stanley

Breaks Above 1.4000 to Re-Open the Door to Top-Side Approaches

At this stage, the big question is whether the longer-term bullish trend in Cable might be ready for resumption. This up-trend was quite pronounced as we traded through January, and the February pullback brought resumption very much into the question; but with the bullish break of the February trend-line yesterday, as driven by yesterday’s unveil of the UK’s spring statement, the potential exists for further topside run.

GBP/USD Daily Chart: Longer-Term Up-Trend Intact

gbpusd daily chart

Chart prepared by James Stanley

Near-Term Setups into Longer-Term Trends

A break above 1.4000 could further reinforce this bullish continuation potential, opening the door to a further topside response in the pair. Above 1.4000, potential resistance levels at 1.4070, 1.4142, and then the psychological level of 1.4250 could be interesting areas to investigate for profit target potential.

gbpusd hourly chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on GBP/USD? Our DailyFX Forecasts for Q1 have a section specifically for GBP/USD. We also offer a plethora of resources on our GBP/USD page, and traders can stay up with near-term positioning via our IG Client Sentiment Indicator.

--- Written by James Stanley, Strategist for DailyFX.com

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