GBP/USD is trading higher as the market reacts to the next phase of UK reopening and the retreating of the US dollar. On Monday, the UK government further eased COVID-19 restrictions by allowing indoor dining and drinking. However, concerns over the Indian variant will have the government closely monitoring the situation. Preliminary data have indicated that the available vaccines are effective against the variant.
GBP/USD has also found support in the weakening US dollar. After hitting a one-month high of 1.70, the benchmark 10-year US Treasury yields have been declining to the current 1.64. Subsequently, the greenback is down by 0.08% at 90.12.
In today’s session, the currency pair will also be reacting to the UK job numbers. on the one hand, March’s unemployment rate and average earnings index + bonus are expected to remain unchanged at 4.9% and 4.5% respectively. At the same time, analysts expect an employment change reading of 50,000 MoM compared to the prior -73,000.
GBP/USD Technical Outlook
GBP/USD has extended Monday’s gains. At the time of writing, it was up by 0.27% at 1.4169. On an hourly chart, it is trading above the 25 and 50-day exponential moving averages. Besides, it is above the ascending trendline highlighted in black. For as long as the pair remains above this trendline, a bullish outlook remains.
In my opinion, GBP/USD will ease at around 1.4165, which was a crucial resistance level in late February and last week. However, the path to 1.4200 is clearer. As such, I expect the entry of more buyers to push the price to that target in the near term. The bulls may then retest 1.4240, which will be a three-month high. However, a move below 1.4130 will invalidate this thesis.
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