The pair will likely keep rising as bulls target the first resistance level at about 1.3600.
Bullish View
Bearish View
The GBP/USD price rose to a key resistance level after the UK government ruled out further Covid-19 restrictions. The pair rose to a high of 1.3550, which was also the highest level on December 31st. It has risen by 2.85% from the lowest level in December.
UK and US Covid Surge
The UK and the US continued seeing a surge of the number of Covid-19 cases. In the UK, health officials confirmed about 187k cases on Tuesday. Similarly, in the US, the number of cases jumped to more than 1 million, which was the highest level on record. This trend will likely continue because of the interactions that happened during the holiday season.
Still, analysts are optimistic that the number of cases will start to decline in the coming weeks. Also, they recommend that people should focus on the number of hospitalizations instead of the daily tally. That’s because the Omicron variant is relatively mild and most people are getting well within a few days. This explains why the UK government has been reluctant about imposing new lockdowns.
The GBP/USD also rose after the UK published the latest lending data. According to the Bank of England, consumer credit jumped to 1.23 billion in November. In the same period, more than 66.9k people were approved for a mortgage while mortgage lending jumped to more than £3.69 billion.
Additional data from the UK showed that the manufacturing sector did well in December. According to Markit, the manufacturing PMI rose to 57.9 in December. This was an upward revision from the previous estimate of 57.6.
Later today, the GBP/USD will react to the latest ADP nonfarm employment numbers data. Economists expect the data to show that the private sector added more than 400k jobs in December. These numbers will come two days before the official non-farm payrolls numbers.
GBP/USD Forecast
On the four-hour chart, we see that the GBP/USD pair has been in a strong bullish trend in the past few weeks. As a result, the pair has moved slightly above the 50% Fibonacci retracement level. The upward trend is also being supported by the 25-day and 50-day exponential moving averages (EMA). It has also moved slightly above the standard pivot point.
Therefore, the pair will likely keep rising as bulls target the first resistance level at about 1.3600. This view will be invalidated if the price moves below 1.3500.
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