GBP/USD looking to extend rally past 1.4 as brexit fears wane
- The Sterling looking resilient in the face of risk-souring US political strife.
- An upbeat economic outlook and fading Brexit concerns driving the pair steadily higher.
The GBP/USD is maintaining an elevated position on the week despite risk aversion taking a beating on US political woes, and the pair is pushing into the high side near 1.4000 in Asia.
The Uk's Budget Report on Tuesday bolstered the economic outlook for the kingdom and the Sterling surged on the news, reaching a high of 1.3994 for the day. This follows on the heels of a possible announcement for a tentative EU-UK Brexit trade deal, which will do wonders for Brexit fears that have been clouding the GBP's outlook as of late. A definite announcement and further details are expected at a European Union conference at the end of the month.
The GBP/USD retracted slightly following non-action on the US CPI figures that failed to spark any movement in the markets after coming out exactly at expectation, but the White House did not fail to deliver, spewing a plethora of headlines that sent risk sentiment packing as Trump fires his own hand-picked Secretary of State and seeks an additional $60B in tariffs and restrictions specifically targeting China.
Wednesday's tone should be markedly more sedate, though a speech at 08:00 GMT from the European Central Bank's President, Mario Draghi, could spark some knock-on volatility in the Sterling if the ECB lashes out against Trump's recent steel tariffs. Later in the day will also see the US Retail Sales figures at 12:30 GMT, and the headline month-over-month core figure for February is expected to come in at 0.4% versus the previous period's 0.0% flatline.
GBP/USD Technicals
Tuesday's rally has pushed the pair up-and-out of March's brief consolidation, and bulls will be looking to extend the run as the pair gear up to close higher for a fourth consecutive day, although bullish momentum remains limited despite the GBP/USD closing higher for eight of the last nine trading days. On H4 charts the pair is looking decidedly bullish, with last week pricing in a higher low and the pair set to begin challenging February's swing highs. Support is currently priced in at last week's high of 1.3930 and the last swing low of 1.3875, with resistance at February's last two swing highs at 1.4070 and 1.4145 respectively.