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The British pound has been ramping higher against the US dollar currency, as the greenback comes under pressure from all directions on the foreign exchange market after last week’s monthly jobs report.
Sterling also benefitted from the slightly hawkish Bank of England policy decisions, where the central bank sounded it’s most positive towards the UK economy since the start of the COVID-19 pandemic.
Similarly, the FTSE100 and the S&P 500 have both been surging over recent days. Typically, the GBPUSD pair performs well when the S&P 500 is in rally mode, due to its positive price correlation with the index.
More positive data from the UK economy this month and continued weakness in the US dollar index should paint a bullish price picture for the GBPUSD pair. This also fits in with the current technical backdrop.
A number of bullish patterns are currently playing out to the upside with a wide-reaching upside target. The 1.4200 level is the near-term objective of one of the bullish patterns, however, a much larger pattern is alluding to a coming break above 1.5000.
Sterling has not traded above the 1.5000 handles since the United Kingdom voted to leave the European Union. The key upside level to watch is 1.5019, which is the Brexit swing-high, from way back in June 2016.
Looking at sentiment metrics, the ActivTrader Market Sentiment tool shows that some 63 percent of traders remain bearish towards the GBUSD pair right now. Bearish sentiment probably means more gains in the GBPUSD pair as traders continue to lean against the prevailing uptrend.
GBPUSD Short-term Technical Analysis
Looking at the four-hour time frame, an inverted head and shoulders pattern continues to play out to the upside, following last week’s key breakout above the 1.4010 resistance level.
According to the overall size of the typically bullish price pattern the GBPUSD pair could be headed towards the 1.4200 level over the short-term horizon.
It is noteworthy that the current yearly high is found at the 1.4240 level. This could be another target for bulls if the 1.4200 level is breached.
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GBPUSD Medium-term Technical Analysis
According to the daily time frame a huge, inverted head and shoulders pattern will be ignited if the 1.4240 resistance level is activated to the upside.
This pattern holds an upside target of 3,000 points, which means the medium to long-term price path for the GBPUSD pair looks particularly positive.
Just to underscore, the GBPUSD pair could be headed towards the 1.7000 resistance level. Watch out for explosive gains above the 1.4240 level.
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