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Latest GBP USD Analysis and Forecast

US Dollar weakens in "risk on" environment, Pound mixed

  • The US Dollar has weakened across the board into mid-May, as global equity markets retain a "risk on" tone.
  • The Pound has renewed its strength against the US Dollar after a strong performance by the Conservative Party in May local elections.
  • However, the benefits from the impressive UK vaccine rollout are mostly priced in.

Rebound, still looking for a downside correction bias 

Day trade update and view

A rebound Friday after Thursday's plunge just below 1.4015 support to 1.4005, but whilst below 1.4111 we hang onto negative pressures from the mid-May breakdown  below 1.4104 and 1.4053 supports for a small topping pattern, leaving risks lower for Monday.

Day trade setup

  • We see a downside bias for 1.4005 and 1.3952; a break here maybe aims for 1.3918.
  • But above 1.4111 opens risk up to 1.4166 and 1.4182.

Intermediate-term outlook

The early May surge above key 1.4005/26 resistances signalled an intermediate-term shift to a bull trend.

  • Upside risks: We see an intermediate-term bull trend to aim for 1.4377 and maybe towards 1.5000/19.
  • What changes this? Below the 1.3801 shifts the intermediate-term bull trend straight to an intermediate-term bear trend.

GBP USD Calendar

17/05/21 China Industrial Production & Retail Sales

18/05/21 Japanese GDP; UK Employment report; EU GDP; ECB’s President Lagarde speaks

19/05/21 UK CPI; Canadian CPI; FOMC Minutes

20/05/21 Australian Employment report; ECB’s President Lagarde speaks

21/05/21 Japanese CPI; Australian Retail Sales; UK Retail Sales; Canadian Retail Sales; global Markit Flash Manufacturing and Services PMI

View Full Calendar

Please join the GBP USD discussion

    1. The Pound (GBP) is falling against most currencies today due to the release of the UK GDP, Manufacturing and Industrial Production data. Practically all elements of the is report were negative, with the quarterly contraction in GDP the first since 2012 indicating a weakening economy.
      This layers on top of ongoing fears about a “No Deal” Brexit and the threat that the Bank of England may need to cut interest rates. All of these factors are negative for the currency, hence the move lower for GBPUSD and GBPJPY, plus the move higher for EURGBP.
      Also, from a technical analysis perspective, GBPUSD, EURGBP and GBPJPY are moving to multi-year extremes, which sends a negative signal for GBP.
      Hope this helps, please revert with any further questions.

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