GBP/USD Bullish While in a Rising Channel

Summary:

GBP/USD looks bid while moving in a rising channel. Bulls may want to buy into support as the US dollar's weakness remains the dominant theme.

The bullish price action on the GBP/USD pair continues as it remains in a rising channel. Moreover, the price action is powerful enough to hold into the upper side of it, on the back of ongoing US dollar weakness.

The weakness in the dollar was the main theme during the trading month. In fact, right from the first trading day of April, the dollar reversed and never looked back.

In the case of cable, the pair formed a double bottom around the 1.37 level and now threatens to break above 1.43 on ongoing strength. However, this strength is not driven by the British pound’s strength, but, as mentioned earlier, by the US dollar’s weakness.

The Fed mentioned that it would taper the asset-purchases if it feels it will have a negative impact on inflation. However, the market participants fully expect that the central banks will, someday, refrain from more accommodative measures, and so the initial market reaction to the tapering news was reversed quickly.

GBP/USD Technical Analysis

Bulls may want to stay on the long side while the price action holds in the upper half of the rising channel. A move to the lower half is slightly bearish, while a drop below the main trendline should trigger more weakness. Bulls might want to wait for a pullback into the 1.4150 and go long with a stop at 1.4050 and a risk-reward ratio of 1:2.