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GBP/USD bulls taking on bearish commitments at daily resistance

  • GBP/USD stay in charge on Tuesday but bears are lurking.
  • A significant correction could be on the cards according to the market structure.

(FxStreet) GBP/USD is trading higher by 0.26% at the time of writing, adding even to Monday’s strong surge to the upside on relief over the Scottish election results, improved economic forecasts, and lockdown easing measures.

At the time of writing, cable is trading at 1.4154 after travelling from a low of 1.4103 to a high of 1.4167. 

The results of the Scottish election, whereby the Scottish National Party did not secure an outright majority, was a let-off for the bulls. 

Pro-independence parties won a majority in Scotland’s parliament on the weekend and it is unlikely that there will be a second independence referendum because it would require the approval of the British government. Prime Minister Boris Johnson has ruled this out.

Meanwhile, the Bank of England has been a factor of late with respect to the pound’s solid performance in the G10-FX space.

Having said that, tomorrow’s UK Gross Domestic Produce data will be keenly eyed as the central bank expects growth to show a recovery to pre-Covid levels over the remainder of this year. 

Besides the economic calendar that includes not only the release of UK Q1 GDP and March industrial production, but it should also be noted that there will be a speech BoE Governor Andrew Bailey

Also, the unveiling of PM Johnson’s measures in the next unwinding of Covid related restrictions will be a focus and consumer confidence would be expected to be on a high in the good news of the progress of the vaccination of the Kingdom.

GBP/USD technical analysis

The price is meeting a supply area and would be expected to retrace a sizeable portion of the bullish impulse. 

The prior highs could be targeted considering the confluence with the 50% mean revision of the rally.

(By Ross J Burland)