Bottom line: GBPUSD long term structure continues to remain bullish against 1.1414 support. In the short term, bulls might be targeting 1.2900 before finding resistance again. We can expect a meaningful corrective drop thereafter.
Fundamental Outlook:
EURUSD exchange rate has been the biggest beneficiary in the past 2 weeks as it had reached close to 1.1400 levels last week. It would be taking cues on the distribution of the proposed EURO 750 billion recovery fund by the European Union to help recover from the COVID-19 pandemic. The exchange rate might gain further on the agreement of the proposed fund, by all members.
GBPUSD has also managed to rise, pushing through 1.2700 levels. The currency pair might be facing volatility this week, as news come in regarding Brexit talks on the proposed extension of July 01 deadline. The better than expected NFP (+2.5million jobs were added) last week also helped gain as the US Dollar faced a tough week.
Oil prices continued to surge further today, as WTI Crude trades at $39.84, up nearly +2% as we write this article. On the other side Brent is also up over +2.0%, trading close to $42.80. The decision taken by the OPEC+ to continue its production cut of 10 million barrels per day by another month has aided prices further.
Technical Analysis:
GBPUSD bulls continue to remain in control as they print higher highs and higher lows since 1.1414. The recent higher low was print just below 1.2100 mark, and since then bulls have been targeting 1.2850/1.2900 levels before producing a corrective drop.
GBPUSD would complete an impulse wave if prices reach 1.2900 mark. This would also confirm a long term trend reversal and that bulls are here to stay. Structurally, a corrective drop can be expected after breaking above 1.2900 resistance. It could also reach 1.3200 and 1.3500 resistance as well, if the recent rally extends itself.
Prepared by
Harsh Japee, Technical Analyst.
GBPUSD Chart
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