The pair will likely keep rising as bulls target the next key resistance at 1.4300.
- Buy the GBP/USD after the bullish breakout.
- Add a take-profit at 1.4300 and a stop-loss at 1.4200.
- Timeline: 1-2 days.
- Set a sell-stop at 1.4218 and a take-profit at 1.4150.
- Add a stop-loss at 1.4300.
The GBP/USD pair soldiered on as traders priced in a robust UK economy ahead of the full reopening that is scheduled for next week. The pair rose to 1.4250, the highest level since April 16, 2018. It has risen by more than almost 25% from its lowest level last year.
UK Recovery Accelerates
The GBP/USD has done relatively well because of the overall resilience of the UK economy. Investors have appreciated the recent Brexit deal between the UK and the EU and the role the government has played in delivering coronavirus vaccinations.
Recent data from the UK have been positive. The numbers showed that the economy started to crawl back in March this year as it rose by 2.3%. This trend likely continued in April and May. Retail sales, inflation, and other industrial numbers also did relatively well.
Therefore, with the country set to reopen fully in June, analysts are optimistic that the UK economy will have a faster recovery.
Looking ahead, analysts expect that data from the UK will be positive. Nationwide will publish the latest house price index (HPI) data. Analysts expect the numbers to show that the HPI rose by 0.8% month-on-month and by 9.2% year-on-year in May. This will be an improvement from the previous increase of 7.1%.
The GBP/USD will also react to the latest UK Manufacturing PMI data. Analysts also expect the data to show that the MPMI rose to 62.8 in May, which is further evidence that the economy did relatively well. The pair will also react to a speech by Bank of England’s Andrew Bailey.
The pair will also be affected by the latest Manufacturing PMI numbers from the United States and statements by Fed’s Lael Brainard and Randal Quarles. A few days ago, Quarles moved the market when he said that the Fed will likely maintain the current policies for a while.
GBP/USD Technical Forecast
The GBP/USD had a bullish breakout above the key resistance level at 1.4235 in the overnight session. On the four-hour chart, the pair has moved above the 25-day and 15-day exponential moving averages (EMA) and the ascending red trendline. Similarly, the two lines of the MACD have moved above the neutral line. Therefore, the pair will likely keep rising as bulls target the next key resistance at 1.4300.