GBP/USD Technical Analysis: Preparing for Buying Levels

Mahmoud Abdallah

The bearish momentum of the GBP/USD remains intact, and stability below the 1.3700 support level will support a move towards stronger support levels.

Last week’s trading was abysmal for the GBP/USD pair, which collapsed to the 1.3670 support level before closing the week’s trading by settling around 1.3710, where it also began this week’s trading. The pound largely gave up its gains with calm optimism in light of the UK's vaccination progress, which paves the way for a rapid economic recovery.

Millions of people in Britain will have their first chance in months for haircuts, informal shopping and restaurant meals from Monday, as the government takes the next step in its roadmap to lift lockdown restrictions. Country-wide restrictions had been imposed in England since early January, and similar rules in other parts of the United Kingdom, to suppress an increase in coronavirus infections that swept the country late last year, linked to a new, more transmissible variant that was first identified in southeast England.

Britain has seen the worst outbreak of the coronavirus in Europe, with more than 127,000 confirmed deaths.

All infections, hospitalizations and deaths have decreased thanks to the lockdown and a comprehensive vaccination program that has given at least one dose to more than 60% of the adult population. But British Prime Minister Boris Johnson and epidemiologists urged caution, saying that many people were still not immune and that loosening social distancing rules or allowing foreign holidays this summer could lead to a new spike in infections.

“The situation in the UK is clear and stable, but people have to remember that this is not the case anywhere else,” said Peter Horby, head of the government's New and Emerging Respiratory Threats Advisory Group. The pandemic continues to rage globally. Even many countries in Europe are still seeing increasing infection numbers or having to reimpose lockdowns. So it is very difficult to predict what will happen in the next two months.

On Monday, non-essential stores will be allowed to reopen, along with hair salons, gyms and open-air service in bars and restaurants. The prime minister had promised to visit a bar for a pint to celebrate the occasion, but he postponed a celebratory drink after the death of Prince Philip, Queen Elizabeth II's husband, on Friday.

Indoor dining and drinking will not be permitted until May 17 at the earliest, and theaters, cinemas, nightclubs and most other venues will remain closed, while indoor socialization is severely restricted and outdoor holidays remain prohibited. Facilitation is good news for retail and hospitality companies, which have suffered from several stretches of closure over the past year. But it is a long way from business as usual.

Rules apply in England. The other parts of the United Kingdom - Scotland, Wales and Northern Ireland - are following their own broadly similar plans.

Technical analysis of the pair:

The bearish momentum of the GBP/USD remains intact, and stability below the 1.3700 support level will support a move towards stronger support levels, the closest of which are 1.3655, 1.3570 and 1.3490. The daily chart indicates strong oversold levels, which are likely the best buying levels. On the upside, psychological resistance 1.4000 will remain the most important for a bullish performance.

GBP/USD

Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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