UK British Pound Technical Outlook: BullishGBP/USD bulls aim to break above the key psychological level of 1.36 despite a hawkish FedEUR/GBP falls
UK British Pound Technical Outlook: Bullish
- GBP/USD bulls aim to break above the key psychological level of 1.36 despite a hawkish Fed
- EUR/GBP falls to critical support at the lower bound of the descending triangle formation
- GBP/JPY eager to break above October highs in an effort to claim 160
The British Pound has held onto recent gains as the rapid spread of the Omicron variant continues to hinder the pace at which the global economy can recover from the Coronavirus pandemic. After the BoE (Bank of England) made a decision to raise rates in December, the Sterling ended the year in positive territory and remains resilient against its major counterparts.
Although fundamental factors continue to drive risk sentiment, a high vaccination rate in the United Kingdom combined with higher rates has supported GBP/USD despite a hawkish Federal Reserve (Fed).
Find out more about the impact of interest rates on the foreign exchange market
Meanwhile, for EUR/GBP and GBP/JPY, the carry trade (difference between the rate differentials) has the probability of supporting Sterling prices as policymakers continue to fight against the effects of rising inflation.
GBP/USD Technical Analysis
After rebounding off of the 38.2% Fibonacci retracement level of the 2018 – 2020 move at 1.324, GBP/USD bulls managed to drive prices higher before facing a wall of resistance at the upper bound of the descending channel which continues to provide additional zones of support and resistance.
As bulls strive to clear the key psychological level of 1.36, price action currently remains below the 50-week moving average (SMA) and within the range of 1.32 and 1.36 respectively.
GBP/USD Weekly Chart
Chart prepared by Tammy Da Costa using TradingView
However after bears failed to break below Fibonacci support, prices have since risen above the 50-day moving average (MA) on the daily time-frame while the CCI threatens oversold territory. If bulls are able to drive prices higher, a retest of 1.38 may be probable. On the contrary, failure to break above channel resistance may provide bears the opportunity to push prices back towards the 1.32 handle.
GBP/USD Daily Chart
Chart prepared by Tammy Da Costa using TradingView
EUR/GBP Technical Analysis
After five consecutive weeks of losses,the fundamental backdrop has allowed EUR/GBP to fall to a critical level of support, formed by the lower bound of a descending triangle. As bears now aim to retest the 2020 low at 0.828, bulls would need to drive prices above trendline resistance at the key psychological level of 0.85 for a chance at reviving the upward move.
EUR/GBP Weekly Chart
Chart prepared by Tammy Da Costa using TradingView
As both the European Central Bank (ECB) and Bank of Japan (BoJ) maintain a dovish stance, EUR/GBP has the potential to continue to decline while GBP/JPY may continue to benefit from the carry trade.
GBP/JPY Weekly Chart
Chart prepared by Tammy Da Costa using TradingView
— Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
element inside the
element. This is probably not what you meant to do!Load your application’s JavaScript bundle inside the element instead.
www.dailyfx.com