GBP/USD: Rally or Corrective Rebound?

GBP/USD is on a corrective rebound ahead of the UK GDP data. Analysts expect the country’s economy to have shrunk by 1.5% in the year’s first quarter after expanding by 1.3% in Q4’20. On a year-on-year basis, experts forecast a reading of -6.1% for Q1’21.

The economic data comes amid the ongoing concerns over the rise of COVID-19 cases in the country and other parts of the world. The subsequent decline in risk appetite has helped strengthen the dollar.

Notably, the currency pair will also be reacting to the ADP nonfarm job numbers and US pending home sales data. Better-than-expected figures will further exert pressure on GBP/USD.  

GBPUSD technical outlook

GBP/USD is up by 0.09% at 1.3853. On Tuesday, it hit a one-week low of 1.3814 with an RSI of 28. It has since gotten out of the oversold territory through a corrective rebound of about 0.38%. On a two-hour chart, it is trading below the 25 and 50-day exponential moving averages. Notably, it is finding resistance along the 25-day EMA at 1.3866.

GBP/USD is likely to continue experiencing pressure from a stronger greenback. Depending on the UK GDP data, a move past the current resistance level of 1.3866 will clear the path for its next target at 1.3900 before pulling back. On the flip side, weaker-than-expected numbers may have the bears pushing the pair to 1.3800.

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GBP/USD price chart

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