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The British pound has had a wild week against the US dollar on the foreign exchange market after bulls failed to crack the 1.3900 support level this week, despite the UK announcing an end to lockdown.
As the US dollar index has also been very volatile and started to slide on the back of last Friday’s US job report, which appears to have underwhelmed investors. However, the US dollar has been turbo charged again this week by the bond market.
Optimism arising out of the unlocking news has failed to boost sterling. UK Prime Minister Boris Johnson announced his plan to lift most of England’s remaining COVID-19 restrictions by 19th July this. All being well the final announcement will come on 12th July, so sterling bulls may be waiting for official confirmation of the lockdown ending.
On the technical front the GBPUSD pair bounced from key weekly resistance last week and is now pondering its next month around the 1.3800 level. The GBPUSD pair needs to move back above the 1.4030 level in order for the short-term trend to go bullish.
US news is likely to have the next big impact on the GBPUSD pair, as we see the releases of US PMI manufacturing data, and also the FOMC meeting minutes, which is usually a mover for US dollar pairs.
According to the ActivTrader Market Sentiment tool traders are even split about the direct of sterling with 50 percent of traders remain bearish towards the GBUSD pair right now and 50 percent bullish.
GBPUSD Short-term Technical Analysis
Looking at the four-hour time frame, the GBPUSD pair will need to hold the 1.3800 level in order to prompt a towards the 1.4000 level. If this scenario does happen then a large, inverted head and shoulders pattern.
Should we see the GBPUSD pair forming the mentioned pattern then a further rally towards the 1.4200 level would then be possible. The short-term trend will turn bullish above the 1.4030 level.
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GBPUSD Medium-term Technical Analysis
According to the daily time frame a bullish rebound from the top of large falling price channel took place last Friday, meaning the GBPUSD pair may be headed back to the highs of the year.
The wider picture still shows that a massive, inverted head and shoulders pattern is still in play, which holds a massive 3,000-point upside projection. Watch out for the overall uptrend to resume as long as the GBPUSD pair trades above the 1.3730 to 1.3660 support cluster.
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