GBP/USD is trading above 1.39, significantly higher, amid an improving market mood and after UK PM Johnson said the country is on track to fully reopen on June 21. US ISM Manufacturing PMI missed with 60.7 points.
The GBP/USD pair holds on to daily gains but lacks follow-through. The 4-hour chart shows that the pair has managed to overcome its moving averages, currently developing a few pips above its 20 SMA. Technical indicators reached their midlines before losing strength, with the Momentum now retreating and the RSI stable at around 54. Bulls will have better chances on a clear break above 1.3930, which should lead to a retest of 1.3976, en route to the 1.4010 region.
Support levels: 1.3845 1.3800 1.3760
Resistance levels: 1.3930 1.3975 1.4010
Fundamental Overview
The GBP/USD pair recovered most of the ground lost on Friday, ending this first day of the week a handful of pips above the 1.3900 level. The pair traded as high as 1.3931 but was unable to break the key Fibonacci resistance level.
There’s a lot of political noise in the UK, but little macroeconomic data. On the Brexit front, UK authorities had agreed to issue the first post-Brexit licenses to French fishing vessels. Permits came after French President Emmanuel Macron menaced to increase already tight export control on UK fisheries products after the kingdom left the EU. Tensions persist, discouraging pound buyers. Also, Scotland is heading into the polls this Thursday, May 6, and a victory from the Scottish National Party, which has ruled the nation since 2014, may bring back to the table the independence’s battle.
The UK will publish on Tuesday, March money figures, while Markit will release the April Manufacturing PMI foreseen at 60.7, unchanged from its preliminary estimates.
Big Picture
GBPUSD BULLISH THEMES
GBP BULLISH
- British economic data continue to improve
- Bank of England see hopeful signs ahead for the UK
- The UK’s amazing vaccination prowess strengthen the pound
- Vaccine optimism and shelving of negative rates to drive sterling higher
- BoE has left its rates unchanged, yet all but closed the door on negative rates
- BoE’s acknowledgment of vaccines helps the pound
- BoE’s Bailey remains sceptical on negative rates
- AstraZeneca vaccine approval helps improve outlook for 2021 recovery
- Business optimism for the 12-month outlook remains upbeat
- Bailey ready to buy bonds
- UK to be one the first countries to have vaccine access
- UK unemployment jumps but furlough scheme should limit future increases
- Biden’s victory pushes Boris to Brexit compromise
USD BEARISH
GBPUSD BEARISH THEMES
GBP BEARISH
- Uncertainties over the future of the Brexit deal
- New covid mutation is ‘out of control’ in the UK
- Moody’s downgrades the UK’s credit rating
- OECD warns of UK economic scars
- The UK is screwing up politically even worse than the US
- BoE prepares for negative interest rates
- BoE’s message is clearly dovish, specter of negative rates
- A a no-deal Brexit outcome is now a much greater risk
- Consumer confidence stays low and the potential of more local lockdowns remains in place
- The longer we go without a deal, the more pressure comes onto the pound
- EU-UK trade discussions not going as well as indicated by UK PM’s spokesperson
- UK set for slow recovery after record second quarter economic decline
- Cracks appears in UK labour market
