Bottom line:  GBPUSD bullish structure remains intact until prices stay above the 1.1414 mark going forward. The engulfing bullish chart pattern still holds, as traders prepare to target above 1.3200/1.3500 levels respectively.

Fundamental Outlook:

GBPUSD may find an uptick this week as the UK begins to re-open. UK Prime Minister Boris Johnson had laid out steps towards easing the lock down yesterday allowing manufacturing and construction work to resume. As economies re-open (US, UK and European Countries) Crude Oil demand is expected to surge again sending prices higher going forward.

FTSE had rallied last week by around 3% along with other global indices. Today, as we write the article the indice is up 1.5% trading around 5969 mark. The indices might be pinning hopes over post lock down as economies re-open in the US and Europe. Also, the easing US-China trade war fears might be reason behind the optimism. As IMF forecasts an inevitable drop (-3%) in Global GDP figures in 2020, it remains to be seen how long the rally could continue.

EURUSD had come under pressure last week and has dropped below the 1.0800 mark before seeing some buying around 1.0765. The Euro zone could be facing an economic contraction by over 7% in 2020, due to COVID-19 pandemic. The EURO would be taking cues from GDP Growth Rate figures to be out this week (Friday).

Technical Analysis:

GBPUSD bulls seem to be back in control after printing lows around 1.2266 levels last week. It is trading back above 1.2400 mark as we write this article and bulls remain poised to push towards 1.3200 resistance as their next target.

GBPUSD has been printing higher highs and higher lows since 1.1414 lows. Since 1.2485 highs, the currency has remained sideways and might have completed a triangle structure at 1.2266 levels last week. Ideally, we could see prices pushing higher towards 1.3200 and 1.3500 levels respectively.

Traders might be preparing to take profits on long positions initiated earlier around the 1.3200 mark. GBPUSD is then expected to produce a meaningful corrective drop, providing yet another opportunity to initiate longs.

Prepared by

Harsh Japee, Technical Analyst.

GBPUSD Chart

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