**GBP/USD Price Forecast: Bullish Momentum Holds Above Mid-1.3300s Around 38.2% Fibo Level**
*By Harshal Barot, FXStreet*
**Overview**
The British Pound (GBP) started the Asian session on a positive note against the US Dollar (USD), holding its ground above the mid-1.3300s. This position marks the currency pair’s movement within striking distance of the 38.2% Fibonacci retracement level of the rebound from its multi-week low. Throughout recent sessions, the pair has displayed resilience, buoyed by a confluence of technical factors and market sentiment, which continue to support a constructive short-term outlook.
**Current GBP/USD Technical Analysis**
A closer look at GBP/USD price action reveals several key technical influences:
– The pair displayed a bullish bias, as evidenced by sustained trading above the mid-1.3300s.
– The 38.2% Fibonacci retracement level is projected as a nearby support, lending credence to the rebound thesis.
– The upward movement in GBP/USD is further underpinned by multiple technical support levels.
– On the resistance side, key technical barriers cap further advances, requiring a clear move beyond for a more decisive bullish confirmation.
From a technical perspective, the overall trend remains supported by:
– The ongoing recovery from a recent multi-week low.
– The construction of a higher-low pattern on lower timeframes.
– Nearby technical indicators such as short-term moving averages, which point to sustained demand on dips.
**Fundamental Factors Steering GBP/USD**
The optimism behind GBP/USD’s resilience is influenced by several macroeconomic and policy factors:
– Fading concerns over a near-term extension of the Bank of England’s (BoE) quantitative easing, with markets instead expecting tighter policy in the months ahead.
– Better-than-expected UK macroeconomic releases, which bolster confidence in Britain’s recovery trajectory.
– Positive sentiment around the UK labor market, reflecting tightness and the potential for wage-led inflation.
– Waning fears over a hard Brexit in the immediate term, even as longer-term trade issues remain relevant.
– The US Dollar’s recent softness, attributed to a moderately risk-on tone in global markets and anticipation over Federal Reserve interest rate policy.
**UK Economic Developments Impacting the Pound**
A review of the latest key UK economic events and data underpinning sterling strength includes:
– The latest jobs report highlighted steady employment levels and upward pressure on wages.
– Recent inflation data exceeded BoE targets, intensifying speculation around forthcoming policy tightening.
– Retail sales and consumer confidence indicators surpassed forecasts, underscoring robust domestic demand.
– Ongoing COVID-19 vaccination progress and relaxation of pandemic restrictions continue to support the economic revival.
**US Dollar Performance and Its Implications**
The greenback remains on the back foot due to several factors, contributing to the supportive backdrop for GBP/USD:
– Moderation in US Treasury yields, as bond markets stabilize after recent volatility.
– Reduced investor appetite for the US Dollar as a safe haven amid risk-positive trading conditions.
– Market participants’ cautious outlook ahead of critical US inflation and employment releases.
**Key Technical Levels to Watch**
GBP/USD traders should monitor the following support and resistance levels:
– Immediate support lies at the 1.3350-45 region (near current price, 38.2% Fibonacci level).
– Below, next support is seen at 1.3320, followed by the psychologically significant 1.3300 handle.
– On the upside, the first resistance appears at 1.3400, and a stronger barrier is set around 1.3440-50.
– A successful breach of resistance could pave the way for a retest of the recent swing high near 1.3515.
**Short-Term Trading Strategies**
With GBP/USD trading around crucial technical levels, traders can consider strategies based on both fundamental and technical triggers:
– **Buy on Dips**: Given the established support and bullish
Read more on GBP/USD trading.