GBP : Price Forecast

(Thu, 18 Feb 2021). The neutral stance of the Bank of England, falling coronavirus cases and a rapid increase in the rate of local vaccinations may open the door for the British Pound to continue gaining ground against its major counterparts in the short term. Here are the key levels to watch for GBP/USD, GBP/JPY, EUR/GBP and GBP/NZD rates.

GBP/USD DAILY CHART – KEYING IN ON 1.3900 MARK

GBP/USD looks set to extend its recent push to fresh multi-year highs, as prices burst past psychological resistance at 1.3800.

However, bearish RSI divergence suggests that bullish momentum may be fading. Nevertheless, with price tracking above all six moving averages, and the MACD hovering firmly above its neutral midpoint, the path of least resistance seems higher.

A daily close above the February 10 high (1.3866) probably signals the resumption of the primary uptrend and carves a path for buyers to challenge the 61.8% Fibonacci (1.3956). Clearing that brings 1.4000 into the crosshairs.

Alternatively, sliding back below the 8-EMA (1.3797) could trigger a short-term pullback to its ‘slower’ 34-period counterpart (1.3663).

GBP/JPY DAILY CHART – OVERBOUGHT READINGS HINT AT EXTENSION

The technical outlook for GBP/JPY rates also remains overtly bullish, as the RSI surges to its most extreme overbought readings since December 2019, and price hurdles key resistance at 2020 high (144.96).

A daily close above the psychologically imposing 146.00 mark is required to pave the way for the exchange rate to probe the December 2019 high (147.95).

However, if 146.00 remains intact, sellers may be able to drive price back towards former resistance-turned-support at the 2020 high (144.96). Piercing that likely generates a more extended pullback to the February 1 high (144.10).

EUR/GBP DAILY CHART – 8-EMA GUIDING PRICE LOWER

EUR/GBP seems poised to continue sliding to fresh yearly lows, as price accelerates away from the 8-EMA. With the RSI eyeing a push into oversold territory, and the slopes of all three EMAs markedly steepening to the downside, further losses look likely in the near term.

A daily close below the February 5 low (0.8738) likely signals the resumption of the primary downtrend and brings range support at 0.8670 – 0.8690 into play. Conversely, if 0.8730 successfully neutralizes selling pressure, a rebound back towards 0.8800 could be on the cards.

GBP/NZD DAILY CHART – 200-MA IN THE CROSSHAIRS

The GBP/NZD exchange rate’s rebound from the January low seems set to endure in the near term, after price gapped back above the 100-MA and psychological resistance at 1.9200. The development of the RSI and MACD are indicative of swelling bullish momentum, as both oscillators track firmly above their respective neutral midpoints.

If price remains constructively positioned above 1.9150, a push to challenge the sentiment-defining 200-day moving average (1.9378) looks on the cards. On the other hand, a daily close below 1.9150 probably intensifies near-term selling pressure and carves a path to retest the monthly low (1.8861)

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