Pound Looking Confident

Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex

On Monday, January 25th, the British Pound is looking quite confident while rising against the USD. GBPUSD has reached 1.3705, which is not too far from the last week’s high at 1.3746.

The Pound managed to get rid of a very negative catalyst, Brexit, although the Brexit-related risks, implementation of all negotiated arrangements to be exact, didn’t go anywhere, but investors are pretty calm when assessing them. At the same time, they are also very optimistic about the start of the vaccination against the COVID-19. Market players must be thinking as follows: as soon as the vaccination procedure accelerates, the pandemic will be taken under control. For the country’s economy and population, it will imply the removal of a lot of quarantine restrictions and the opportunity to get back to a normal consumer life. However, this will probably happen in the second quarter at the earliest but investors are fine with that.

This week, the United Kingdom is scheduled to publish a lot of interesting reports on employment for November and December 2020, which may hurt the Pound if there are any changes for the worse.

As we can see in the H4 chart, GBP/USD is moving not far from 1.3688 and this range may be considered as an upside continuation pattern. Possibly, today the pair may grow to reach 1.37440. After that, the instrument may correct to return to 1.3688 and then resume continue trading upwards to form the third ascending wave with the short-term target at 1.3850. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is steadily rising inside the histogram area.

In the H1 chart, after breaking 1.3688 to the upside, the asset is expected to form one more ascending structure to reach 1.3744, which may be considered as the first one inside a new rising wave. After that, the instrument may start another correction to return to 1.3688 and then form the third ascending structure with the target at 1.3800. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is moving above 80, which suggests that the market is trading within the “overbought area” and may complete the first ascending structure. In the future, there might be a new decline in the price chart.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.