GBP/USD – Holding Above 1.40?

Momentum remains with the pound

The pound has been on an incredible run against the dollar, smashing through 1. 40 over the last week and gathering momentum to extend its gains.

When you look at where price is compared to the moving averages, there is an argument that the move is now quite overextended and perhaps poised for consolidation or a correction. But the MACD and stochastic just don’t back this up yet.

We have seen some consolidation over the last 48 hours, but the price is still very stretched regardless. Should we see a move back towards 1. 40 then this would bring it back towards the moving averages on the 4-hour chart and could generate some interest once more.

We’ve just seen a lower high so a small pullback wouldn’t be an enormous surprise and on the daily chart , it would only represent a very modest correction. It would also roughly coincide with the 61.8% retracement of the move from 17 Feb lows to 23 Feb highs.

The vaccine rollout in the UK has been the primary driver behind the pound’s outperformance, with traders seemingly banking on a super-charged recovery this summer as a result of the lockdown being lifted. Life should be back to normal by 21 June under the current roadmap.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.