Updated: Feb 16
The pound has been on an incredible bull run since the second half of 2020, being supported by several fundamental factors including; Brexit deal, vaccine-rollout, economic outlook optimism, less dovish Bank of England, and more. A full breakdown of each of these points can be read in the article here.
Technical breakdown: GBP/USD
GBP/USD continues to see any dips being aggressively bought by the bulls, the structure is firmly within an upward trend. Looking via the monthly chart view, price action formed two potential patterns; inverse head and shoulders structure, in addition to somewhat of a double bottom.
Firstly with the head and shoulders, the head viewable at the low down at around 1.1400 printed in March 2020. The neckline area (1.3500) has been breached and retested via the monthly candle wicks in January and February.
In terms of the double bottom (1.2050), the first hit over the course of July-September 2019, and the second between April-June 2020. The neckline (1.3350) was breached in December 2020, leaving the door open to greater upside pressure.
Keeping all the above in mind fundamentally and technically, there aren't any major risks to stop this current run higher for the time being. The next major area and psychological one will be 1.4000, but then 1.4250-1.4350 (2018 high area) will be eyed.
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