Upward Channel Supporting the GBP/USD Pair – Is There a Buying Opportunity! 

The GBP/USD pair closed at 1.39010, after placing a high of 1.39515, and a low of 1.38690. The GBP/USD currency pair reached its highest level since April 2018, coming close to the 1.400 level in the first half of the day. The pair continued its bullish trend for a third consecutive session on Tuesday, but it started to lose most of its gains in the second half of the day, leaving the pair with a flat movement for the session. The rise in the GBP/USD during the first half of the session was due to rising expectations in the UK, that the restrictions will soon be lifted. After the UK hit the 15 million target in administering nationwide coronavirus vaccinations, GBP investors became more optimistic about the British economy in the months ahead. Prime Minister Boris Johnson also announced a cautious but irreversible plan to ease lockdown restrictions in the coming months. This also raised the expectations of quick economic recovery, which ultimately pushed the British Pound and supported the GBP/USD pair into an upward trend on Tuesday. The growing confidence in the global economy weakened the safe-haven demand, ultimately weighing on the US dollar and supporting the pair’s upward trend. Vaccination rollouts are supporting the global economic confidence in more and more countries.

Furthermore, the US dollar was also under pressure, due to the expected $ 1.9 trillion stimulus package, as it has increased the prospects of recovery in the world’s largest economy. The weakness in the US dollar kept supporting the upward momentum of the GBP/USD pair on Tuesday. On the data front, at 19:30 GMT, the CB Leading Index from Britain came in at -0.5% for December, against November’s -0.3%. On the US side, at 18:30 GMT, the Empire State Manufacturing Index came in, indicating a rise to 12.1, against the projected 6.2, boosting the US dollar and ultimately weighing on the GBP/USD pair.

In the second half of the day, the GBP/USD pair started to reverse its direction, and it began to lose its intraday gains as the demand for the US dollar strengthened. The strength of the greenback came back because of the rising US Treasury yields on the 10-year note. The global bond yields started to rise on the expectations of reflation associated with the massive US stimulus measures proposed by US President Joe Biden. This $ 1.9 trillion package is expected to be approved by the Senate by March 14, and it will be delivered in the following weeks. These expectations proved to be beneficial for the US dollar, and the EUR/USD pair lost its momentum and ended its day with minimum gains on Tuesday.

Daily Technical Levels

Support               Resistance

1.3862                 1.3946

1.3823                 1.3991

1.3778                 1.4029

Pivot Point:       1.3907

The GBP/USD pair is trading at around 1.3897, with immediate support at the 1.3859 level. Closing of candles over 1.3859 suggests odds of a bullish bias in the Cable. On the higher side, the pair could soar towards the next target level of 1.3950. At the same time, the closing of candles outside the 1.3950 level could drive further buying trends in Sterling. On the lower side, a bearish breakout at 1.3859 could extend the selling bias until the 1.3800 mark.