The GBP/USD returned to winning ways this Tuesday after the Bank of England (BoE) Governor Andrew Bailey expressed cautious optimism about the post-pandemic recovery of the UK’s economy. He also did not expect a spike in inflation, adding some support to the British Pound which had lost ground to the US Dollar but retained bullish momentum on the effectiveness of the UK’s vaccination campaign.
The Pound is also gaining as the economy starts to reopen, thanks in no small measure to the vaccination campaign which has covered 22 million people so far. However, rising bond yields for long-term US bonds continue to pose a challenge for the Pound, and this may be a headwind too strong as to block access to price levels above 1.4000 in the short term.
Technical Levels to Watch
Today’s upside move comes off a bounce on the junction between the channel’s trendline and the 1.37916 support line. This move has violated the 1.38616 resistance, with 1.39484 and 1.40051 serving as additional upside targets. A break of the 1.41404 barrier remains the trigger for the sustenance of the recovery move on the pair towards the 26 March 2018/24 February 2021 highs.
On the flip side, a continuation of the correction could come from a rejection and pullback off 1.39484 or 1.40051. This could allow for the pair to target 1.38616 or 1.37916 initially, with the potential to decline further to 1.37463 down the road.
GBP/USD Daily Chart