GBP/USD recorded the fourth straight weekly gain, as the Pound Sterling bulls refused to give up, despite the late rebound in the United States Dollar (USD). US Federal Reserve (Fed) and the Bank of England (BoE)  monetary policy divergence could come into play in a critical week ahead for US inflation.

GBP/USD is gearing up for a bumpy road toward the May 27 2022 high of 1.2669, as portrayed on the daily chart. The US Dollar extended its losing streak into the sixth consecutive week, as both GBP/USD and EUR/USD surpassed key resistance levels, which helped to pave the way for more US Dollar weakness.

The bullish 100-Daily Moving Average (DMA) has pierced through the flattish 50 DMA from below, representing a Bear Cross, which could make it an uphill task for Pound Sterling bulls to resume the recent bullish momentum.

If the correction extends in the week ahead, immediate support is seen at the 1.2350 psychological level, below which the weekly low of 1.2275 could be challenged. At that level, the upward-pointing 21 DMA aligns, making it a powerful cushion for buyers.

Acceptance below the latter will prompt sellers to test bullish commitments at the 1.2200 round figure. The next relevant downside target is seen at 1.2165, the confluence of the 100 and 50 DMAs.

With the 14-day Relative Strength Index (RSI), however, still hovering above the midline, there remains room for the upside.

GBP/USD needs a daily candlestick closing above the ten-month top of 1.2525 to make fresh headways toward the 1.2600 level. Pound Sterling bulls will then aim for the abovementioned strong hurdle at 1.2669.

Pound Sterling tends to maintain bullish momentum

Apr 09 2023