**GBP/USD Price Forecast: Sterling Jumps Above 1.3500 USD**
*By TradingNews team. This article is based on [original reporting and analysis](https://www.tradingnews.com/news/gbp-usd-price-forecast-sterling-jumps-above-13500-usd) by the TradingNews staff.*
The British pound sterling surged past the key $1.3500 threshold against the US dollar, marking a significant recovery fueled by a blend of risk sentiment revival, USD weakness, and ongoing Brexit optimism. After weeks of consolidation and choppy trading, traders and investors are closely watching the GBP/USD pair for further directional cues. In this article, we take an in-depth look at what’s driving the GBP/USD rally, review key technical levels, and outline what’s next for the pair.
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## GBP/USD Rally: Key Drivers Behind the Move
The move higher in GBP/USD, lifting the pair above the 1.3500 level, is the result of several important factors:
**1. US Dollar Weakness**
– Persistent dovish tone from the US Federal Reserve, emphasizing continued monetary stimulus.
– A series of weaker-than-expected US economic data, particularly in labor and consumer metrics.
– Diminished expectations for imminent tapering or interest rate hikes.
– Global risk-on sentiment reducing demand for the safe-haven US dollar.
**2. Post-Brexit Optimism**
– Ongoing constructive talks between the UK and EU over the Northern Ireland Protocol.
– Market perception that both sides are committed to avoiding a hard border and ensuring smooth trade flows.
– Signs of improving UK-EU cooperation on trade, finance, and regulatory alignment.
**3. Signs of UK Economic Resilience**
– Robust performance from the UK services and manufacturing sectors, as evidenced by better-than-expected PMI readings.
– The Bank of England’s cautious optimism about economic growth, hinting at a possible tightening cycle in 2024.
– Falling COVID-19 case numbers and high vaccination rates, boosting consumer and business confidence.
**4. Technical Breakouts and Momentum**
– Breach of key resistance levels triggering algorithmic and discretionary buying.
– Short covering from traders previously betting against the pound.
– Improved sentiment among investors towards UK assets.
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## Technical Analysis: Charting the GBP/USD Breakout
The technical backdrop has shifted considerably following the break above 1.3500. A technical review indicates that this rally could have further room to run, but there are important levels and chart formations to note.
**Recent Price Action**
– The pair spent several weeks consolidating between 1.3400 and 1.3500, with multiple failed attempts at breaking higher.
– Volume surged as GBP/USD punched through the 1.3500 barrier, a level widely watched by institutional traders.
– The bullish breakout has seen follow-through buying, confirming the upside momentum.
**Key Technical Levels**
– **Immediate Resistance:** The next resistance lies near 1.3570, matching late-session highs from January.
– **Psychological Level:** 1.3600 is the next major psychological barrier. Sustained closes above this area could pave the way for further gains.
– **Further Upside Targets:** Fibonacci extensions point to 1.3660 and the 1.3700 round number as additional targets over the short term.
– **Support:** Initial support now sits at the former resistance of 1.3500, followed by a consolidative region near 1.3440.
– **Longer-Term Support:** The 200-day moving average, currently near 1.3240, remains the key longer-term support area to watch.
**Technical Indicators**
– The Relative Strength Index (RSI) is climbing but has not yet reached overbought territory, suggesting further upside is possible.
– Moving average crossovers have turned positive, with the 21-day EMA moving above the 50-day EMA.
– MACD histogram is showing growing
Read more on GBP/USD trading.