This morning GBP/USD reached 1.2597, the highest the pair has attained since February 2, helped by the slump of USD caused by Trump’s healthcare bill failure.
GBP/USD has been trading above the downside uptrend line support since mid-March. The significant psychological resistance level at 1.2500 was broken today during early Asian session.
The bulls are currently testing the next significant psychological resistance level at 1.2600.
At present, the price still trades along the upper band of the Bollinger Band indicator, suggesting the trend remains bullish.
The resistance level is at 1.2600, followed by 1.2630 and 1.2650.
The support line is at 1.2550, followed by 1.2530 and 1.2500.
There are two upcoming risk events this week, which will likely have some impact on GBP.
UK Prime Minister, Theresa May, will trigger Article 50 of the Lisbon treaty on Wednesday March 29, starting the 2-year Brexit negotiation process with the EU. Theresa May will formally notify the EU Council President, Donald Tusk. Tusk is expected to present draft Brexit guidelines to the European Union’s 27 member states within 48 hours of the UK triggering Article 50.
Theresa May’s letter, and Donald Tusk’s response, will likely give markets more clues about the potential difficulties of the upcoming Brexit procedure.
The Scottish parliament will vote on whether to hold a second Scottish independence referendum on Tuesday March 28, which is only one day ahead the triggering of the Brexit process. If the result is to hold a referendum, the proposal will be delivered to the UK parliament for voting. In this situation, it will pose more political uncertainties on the UK’s economic prospects and GBP.
UK Q4 GDP final reading will be released this Friday with better-than-expected readings likely providing some support to GBP.