GBP/USD Analysis: Bulls remain in control, move beyond 1.4000 mark awaited

• A combination of factors assisted GBP/USD to edge higher for the fifth successive session.
• The improving COVID-19 situation in the UK continued acting as a tailwind for the sterling.
• The prevalent USD selling bias supports prospects for a further near-term appreciating move.

The GBP/USD pair reversed an intraday dip to the 1.3935 region and turned positive for the fifth consecutive session on Friday. The uptick pushed the pair back closer to the highest level since June 24 touched in the previous session and was sponsored by a combination of factors. The British pound has been one of the top-performing major currencies this week and was supported by falling COVID-19 cases in the UK.

Against the backdrop of a strengthening economy and rising inflation levels, the improving coronavirus situation has been fueling speculations that the Bank of England (BoE) will be amongst the first major central banks to raise interest rates. This was seen as another factor that acted as a tailwind for the sterling. Apart from this, the prevalent US dollar selling bias further extended some support to the major.

The USD continues to be weighed down by the Fed Chair Jerome Powell's dovish remarks at the post-meeting press conference on Wednesday. Powell emphasised that they were some ways away from substantial progress on jobs and further added that it will take a few more meetings before the Fed starts tapering its asset purchases. Even a softer risk tone did little to lend any support to the safe-haven greenback.

Market participants now look forward to the US economic docket, highlighting the release of the Core PCE Price Index. The Fed's preferred inflation gauge might influence the USD price dynamics and produce some trading opportunities around the major. Traders might further take cues from developments surrounding the coronavirus saga and any Brexit-related headlines. The focus, however, will be on next week's pivotal BoE policy update.

Short-term technical outlook

Looking at the technical perspective, the pair has been trending higher along an upward sloping channel. This points to a well-established bullish trend and supports prospects for additional gains. Bulls, however, took a brief pause near the trend-channel resistance, which coincided with the 61.8% Fibonacci level of the 1.4249-1.3572 downfall. This makes it prudent to wait for some follow-through buying before positioning for any further appreciating move. From current levels, any subsequent move up might confront some resistance near the key 1.4000 psychological mark. A sustained strength beyond will be seen as a fresh trigger for bullish traders.

On the flip side, the 1.3935-30 confluence region, comprising of 100-day SMA and the 50% Fibo. level now seems to protect the immediate downside. This is followed by the 1.3900 mark, below which the corrective pullback could further get extended towards the 1.3860 horizontal support en-route the 38.2% Fibo. level, around the 1.3830-25 region. Some follow-through selling below the 1.3800 mark will negate any near-term positive bias and shift the bias back in favour of bearish traders.