The best performing currency on Thursday was the British pound which surged to a high of 1.3986 (more than 100 pips from our long entry) on hopes of a powerful economic bounce as vaccinations in the U.K. continue to outpace those in the EU. Another reason for sterling’s rise was the lack of demand for U.S. dollars that buoyed the uptrend in the GBP/USD.
Looking at the weekly chart in the GBP/USD we see that the pair posted an almost straight-lined appreciation since September 2020, pushing the cable not only in overbought territory but also towards a crucial resistance zone around 1.40. While the overall uptrend is obvious, we remind traders to prepare for a correction as soon as the area between 1.40 and 1.4020 is tested. A higher support is now seen at 1.3860-50. Below 1.3830, a next lower target could be at 1.3750.
The EUR/USD trended higher on the back of a new round of dollar weakness but the pair remained below 1.21. Below 1.2040 we anticipate further losses towards 1.1970 whereas on the upside, we will wait for a sustained break above 1.2115 to anticipate further gains.
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