The GBP/USD continues its surge above 1.4000 after a successful assault on that key resistance level this Friday. This comes after comments by BoE board member and policymaker Gertjan Vlieghe regarding negative rates on Friday.
While stating that negative rates could be needed sometime later in the year, he has indicated in comments to Reuters that there was “no evidence that negative rates have been counterproductive to the aggregate aims of monetary policy”. Vlieghe went on to stress that households in the top 40% of the income bracket had seen marked increases in savings and that the UK economy appeared capable of operating at a higher level than the first lockdown of 2020.
Vlieghe also said that from a large amount of evidence gathered from countries were negative rates were already at work, negative rates “are effective.”
The GBP/USD accelerated its gains for the day on these comments and was last seen trading at 1.4032, for a gain of 0.45% on the day.
Technical Outlook for GBP/USD
The surge of today takes the pair to the channel’s return line on the daily chart, which may serve as initial resistance. If this is the case and the price experiences a pullback at that level, then the GBPUSD could retest the 1.4000 level once more. A further dip that aims of the channel’s trend line would have to take out 1.39484 and 1.38616 in the process.
On the flip side, a further advance on the pair could target 1.40675 as an additional target, in a move that could break out of the channel’s borders. 1.41404 remains an additional target for bulls if the pair advances beyond 1.40675.
GBP/USD Daily Chart