GBP/USD Breaks Higher, More Gains Likely

GBP price, news and analysis:

  • GBP/USD has broken above the January 27 high at 1.3759, reaching its highest level since April 30, 2018.
  • That sets it up well for further advances, with the April 17, 2018 high at 1.4377 the long-term target once psychological resistance at 1.40 has been broken.

GBP/USD well placed for further gains

GBP/USD is looking strong, breaking above its January high and reaching its highest level for almost three years. From a technical perspective it is therefore in a good place to breach psychological resistance at the 1.40 “round number” and eventually reach the high above 1.4375 last seen in April 2018.

GBP/USD Price Chart, Daily Timeframe (August 31, 2020- February 9, 2021)

Source: IG (You can click on it for a larger image)

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Sterling has benefited from the positive tone in the markets based on the prospect of a large US fiscal stimulus package and positive coronavirus vaccine news. That has lifted US stock indexes to record highs, with the so-called reflation trade weakening the US Dollar but boosting currencies like GBP, EUR and AUD, as well as gold and oil.

Inflation is now seen as a potential concern when the global economy recovers from the Covid-19 pandemic, suggesting that central banks, including the Bank of England, will have to tighten monetary policy as their economies expand.

We have a report here on how central banks impact the FX market

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— Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex

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