GBPUSD: bulls take over as cable jumps above the triangle formation

The GBPUSD pair rose by more than 50 basis points as investors reacted to the return of Boris Johnson. The prime minister returned to Downing Street yesterday, and is expected to lead the country during the pandemic.

GBPUSD rises as Boris Johnson returns

Boris Johnson was infected by coronavirus in March this year. He spent a few weeks working from Downing Street before he was admitted at the Intensive Care Unit (ICU). He then moved to his Chequers residence, where he has been recovering.

The prime minister will be under pressure to explain the strategies he intends to follow as the number of coronavirus cases continues to rise. Yesterday, the NHS said that the number of new cases had jumped by 413. This was the lowest daily total since the end of March. Still, analysts expect the number to continue rising as the week goes on.

The market will also be focusing on Rishi Sunak, the chancellor. He is expected to ask for more money when he addresses the House of Commons. According to The Guardian, he is also expected to make the case for reopening the economy.

Focus to remain on the dollar

In the meantime, the USD will be the main driver of the GBPUSD pair. This is because there is no major scheduled data that will come from the United Kingdom. In the US, we will receive a number of important data this week ahead of the Federal Reserve interest rates decision. The Fed is expected to leave interest rates unchanged when it delivers its decision on Wednesday.

There will be other important data from the United States such as the jobless claims numbers, personal income and spending, and first quarter GDP data. These are the numbers that will move the GBPUSD pair this week.

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GBPUSD technical outlook

On the four-hour chart, the GBPUSD pair rose to an intraday high of 1.2451. This price is a few pips below the 61.8% Fibonacci retracement. This retracement was drawn by connecting the highest and lowest swings in March this year.

As the price rose, it moved above the upper line of the symmetrical triangle that is shown below. The price also moved above the 50-day EMA. Therefore, we expect the pair to continue rising as bulls target the 61.8% Fibonacci retracement level at 1.2500.

On the flipside, bears may come in and push the price lower now that it is close to the right shoulder of the head and shoulder pattern that has been forming.

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