Charts Of The Day: Momentum for the GBP

Market Analysis / 4 Min Read
Milan Cutkovic / 28 May 2021

Highlights:

  • GBP/USD gains momentum on the back of hawkish Bank of England comments
  • GBP/JPY jumps more than 200 points to remain a currency pair worth watching
  • Pressure on USD/CAD currency pair is likely to intensify in the near-term
  • USOIL trading within a key resistance zone and the next few trading days could be crucial for Oil bulls

GBP/USD

The British Pound caught a bid today following hawkish comments from Bank of England policymaker Gertjan Vlieghe. He mentioned that an early rate hike could be possible if there is a smooth transition from the current furlough program. At the same time, he highlighted the risks of hiking rates too early, and reiterated that the uptick in inflation is only a temporary effect.

GBP/USD gained momentum on the back of those comments and is approaching key resistance at 1.4238. The currency pair has been stuck in a rather tight range over the past few days, but a breakout above this level could trigger further momentum buying and pave the way. Looking at the Monthly chart, the next notable resistance level would then lie at 1.4320 (50% Fibonacci level of the 2015-2020 decline) followed by 1.4980/1.50.

GBP/JPY

GBP/JPY is another currency pair worth watching in the coming days. It jumped more than 200 pips higher today, following a longer period of consolidation within a 130 pips range. While GBP/JPY does look a bit stretched in the near-term, the uptrend remains clearly intact and a test of the 156.65 resistance level appears only a matter of time. A clear breakout above this hurdle could take the currency pair to 163.90 in the medium-term. To the downside, the focus will be on the former key resistance level at 154.80, where buyers are likely to emerge again in larger numbers.

USD/CAD

Meanwhile, USD/CAD failed once again at 1.2145 resistance and pressure on the currency pair is likely to intensify in the near-term. Oil prices are marching higher again, which is supporting the Canadian Dollar, while broad US Dollar weakness is persisting.

USD/CAD is consolidating within a triangle and a break below the lower trendline would confirm the double top at 1.2145, paving the way for a continuation of the downtrend. The next significant support level would then lie at 1.1920.

Oil Markets

USOIL is trading within a key resistance zone and the next 2-3 trading days could be crucial for Oil bulls. A daily close above $67 should see USOIL gain momentum fairly quickly and enable a continuation of the rally towards $68. On the other hand, another failure to overcome this hurdle could give bears the upper hand and push USOIL back to the middle of the current trading range. To the downside, the key levels to watch are $65.15, followed by $63.90 and $63.35.

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

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