GBP price, news and analysis:
- GBP/USD is continuing to advance, although some profit-taking seems likely before the pair takes aim at resistance at 1.30 and perhaps even the March highs around 1.32.
- As with other markets, the near-term outlook depends on the US monetary policy decision due at 1900 BST.
GBP/USD consolidating ahead of more possible gains
This month’s strong advance in GBP/USD looks set to continue, although a period of consolidation could well take place first. As the chart below shows, the 14-day relative strength index (RSI) is now above the 70 level that implies an overbought market so a further climb in the pair may be delayed for a while.
GBP/USD Price Chart, Daily Timeframe (February 19 – July 29, 2020)
Chart by IG (You can click on it for a larger image)
of clients are net long.
of clients are net short.
Once any profit-taking is out of the way, GBP/USD will be well placed to hit “round number” resistance at 1.30 and perhaps eventually the March 9 high at 1.32.
In the meantime, though, GBP’s near-term direction will likely depend on the Federal Open Market Committee’s monetary policy statement due at 1900 BST (1400 Eastern time). The Fed is expected to leave its target rate at 0.0-0.25% but a broadly dovish tone seems probable. Then attention will switch back to the negotiations in the US on the next fiscal package, with Republicans proposing $1 trillion of extra stimulus.
You can find a forex trader’s guide to the Federal Reserve here
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— Written by Martin Essex, Analyst and Editor
Feel free to contact me via Twitter @MartinSEssex