GBP/USD: Bulls unstoppable, fast approaching 1.4300

Rallies on weaker DXY and upbeat UK fundamentals.
Brexit jitters on the back seat.
Chart-driven buying?

The GBP/USD pair is seen building on its three-day rally, as the bulls aim to regain the 1.43 handle amid persistent broad-based US dollar weakness and a rally in oil prices.

The latest leg up in the spot is largely backed by the renewed sell-off seen in the US dollar across its main competitors, as the Asian traders react negatively to the US Treasury Secretary Mnuchin’s USD jawboning while subdued Treasury yields also add to bearish bias seen around the buck. The USD index prints fresh three-year lows at 88.86, down -0.16% on the day.

Meanwhile, the pound also remains underpinned by the recent series of upbeat UK fundamentals, especially in the wake of improved public finances, solid industrial orders and higher wages, all of which have overshadowed the looming Brexit jitters.

Looking ahead, “new home sales, the trade balance, and jobless claims are scheduled for release tomorrow - while interesting, these reports are not expected to have a significant impact on the dollar. Instead, the market will be watching the ECB. At this stage, the only trigger for a reversal in current market trends would be central bank rhetoric,” Kathy Lien at BK Asset Management notes. Hence, the major will also close eye the EUR/GBP price-action for any ‘rub-off’ effect on Cable.

GBP/USD Technical Levels

According to Valeria Bednarik, Chief Analyst at FXStreet, “The 4 hours chart shows that technical indicators are easing from extreme levels, but still within the overbought territory, reflecting the ongoing correction rather than suggesting that the rally is over. In the same chart, the price is far above all of its moving averages, with the 20 SMA gaining bullish strength currently around 1.3980. The pair can correct even lower during the upcoming session but bulls will likely resurge on dips, with speculative interest now looking to test the mentioned 1.4460/1.4500 region.”

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