Market Overview

GBP/USD Forecast: Climbing In the Channel On Hopes For Some Luck On The Irish Border

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  • GBP/USD is moving up against the US Dollar, outperforming its peers.
  • Report for an imminent UK proposal on the Irish border is underpinning the pair.
  • The technical picture remains decidedly bullish as the pair climbs through an upward channel.

The GBP/USD is trading around $1.4170, slightly higher on the day which had already seen the lows of $1.4134 and $1.4200. The Times in London reports that Irish officials have been told that the UK will offer a solution to the question of the Irish border imminently. This is good news for Sterling.

Maintaining free movement between the Republic of Ireland and Northern Ireland is vital for keeping the peace in Emerald Ireland. The UK wanted to keep an open border while exiting the EU's Customs Union, two things that do not add up. The recent transition deal on Brexit kicks the can down the road by setting a backstop, or a default, for keeping an open border. A more thorough solution is needed, and it may now be in the works.

Elsewhere in the UK, the BOE Agents Summary notes a modest rise in the cost of labor while retail sales and house prices are weak. The report echoes data already known. 

Broader markets remain negative, with the fall of tech stocks on Wall Street affecting Asian and European markets. This is somewhat supportive of the US Dollar, but the effect is minimal. On the other hand, the meeting between China's President Xi Jinping and North Korean leader Kim Jong-un in Beijing has strengthened hopes for peace in the Korean peninsula and improved the mood.

Later today, the US publishes its final GDP figure for Q4 2017. An upgrade from 2.5 percent to 2.7 percent annualized growth is forecast. See how to trade the event with the Market Impact Tool.

GBP/USD Technical Picture - Bullish

gbp_usd_39-636578250002073540.png

Cable is trading in an upward channel as the thick black lines on the chart show. The pair is posting higher highs and higher lows. The RSI is at 62, indicating gains. After flirting with the overbought level of 70 yesterday, the pair dropped sharply. It is now back to pointing a healthy increase. 

The pair also enjoys robust upside Momentum and also trades above the 50-day Simple Moving Average. 

$1.4220 represents a confluence of many lines and defends the double-top of $1.4245 which is the next level to watch. Further above, $1.4280 was a top on February 1st, and the 2018 high of $1.4342 is the last line to keep an open eye on.

Below, we find the February 16th of $1.4150 as a battle line. Further below, the round number of $1.4000 served as a stubborn line of resistance, and it is followed by $1.3935. The 50-day SMA is also around these levels.

Posted-In: FXStreetNews Eurozone Forex Markets

 

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