GBP/USD reached a weekly high and approached the 1.4100 level during the American afternoon, as the Cable remains on recovery mode after hitting fresh cycle lows on Monday amid uncertainty surrounding a Brexit.
The Sterling suffered a setback mid London session, following the release of the UK construction PMI that declined in February, losing nearly a point and landing at 54.2, a fresh 10-month low. However, GBP/USD later recovered, beginning to correct the overextended decline, and now poised to extend its advance according to technical readings. At time of writing, it is trading at 1.4070, up 0.86% on the day.
GBP/USD technical perspective
“The pair can move back above the 1.41 level, and even extend up to the 1.4250 region, a line in the sand for the latest bearish trend, as if the price manages to extend beyond this last, the upside will look far more constructive, said Valeria Bednarik, chief analyst at FXStreet.
“The short term outlook is bullish by the end of the day, as in the 1 hour chart, the Momentum and the RSI indicators have lost upward strength but hold within overbought territory, with no signs of turning lower, whilst the 20 SMA has advanced strongly below the current level, offering a strong dynamic support at 1.3990,” the analyst said. “In the 4 hours chart, the technical readings are also supportive of an upward continuation, as the Momentum indicator heads higher well above its 100 level, while the RSI indicator consolidates around 63. Should the pair hold above 1.4040, February 26th daily high, the downside will remain well limited, with scope to rally up to the mentioned 1.4250 price zone.”
Support levels: 1.4040 1.3990 1.3950. Resistance levels: 1.4090 1.4130 1.4185.
(Market News Provided by FXstreet)
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