The British Pound hit a six week high against the dollar on Tuesday morning, punching above the 1.4000 resistance level before giving back initial gains and more.
Sterling exploded higher yesterday, bulldozing through multiple resistance levels thanks to a broadly weaker dollar. Appetite towards the currency was also sweetened by the recent easing of lockdown restrictions and roll-outs of Covid vaccines.
According to the latest goverment figures, 10 million people in the UK have received a second dose of the jab - meaning almost 1 in 5 adults have received both vaccines. When factoring in how the average level of coronavirus infections have fallen drastically across the country, could the UK return to pre-COVID-19 normality before the end of 2021?
Focusing back on the pound, it has appreciated against every single G10 currency and is up over 0.80% against the dollar since the start of the week. Fundamentally, the pound not only remains supported by a severely depressed dollar by growing expectations of a strong UK economic recovery.
Can the GBPUSD conquer 1.40?
The 1.40 level will be a tough resistance to crack. This resistance has repeatedly blocked bulls since March 2021. If the fundamentals continue favouring the pound, bulls may have the strength required to break above 1.40. Such a development may send prices towards 1.4140 and 1.4200, respectively.
However, when looking at the technicals, there is still some hope for bears. Should 1.3910 prove to be unreliable support, this may open a path back towards no-man’s territory where prices are likely to range. A further breakdown below 1.3800 could seal the deal for bears, with 1.3680 acting as the next key level of interest.
Prices remain rangebound on weekly
The GBPUSD is trading within a very wide range on the weekly timeframe. Major weekly resistance can be found around 1.40 and support at 1.37. One can’t help but feel that the pound may be waiting for a fresh catalyst before breaking out of this 300-pip range.
Nothing new on the monthly
Nothing much has changed on the monthly charts. The longterm trend remains bullish as there have been consistently higher highs and higher lows. Bulls remain in control as long as prices remain above the 1.3450 higher low. Repeated weakness below the 1.4200 level could threaten the uptrend.
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