The GBP/USD pair is steadily climbing back towards its recent 29-month high of 1.3266, as the US Dollar faces renewed selling pressure. This comes in the wake of disappointing news from Nvidia, a major American AI company, leading to risk-off sentiment in the market.
One key factor driving the GBP/USD uptrend is the diverging monetary policies of the US Federal Reserve and the Bank of England. The ongoing optimism around the Pound Sterling is evident on the four-hour chart, where the currency appears bullish against the US Dollar.
Looking ahead, market participants are eagerly awaiting the US Q2 GDP data release for potential trading cues. Additionally, breaking above the 21-Simple Moving Average (SMA) on the four-hour chart, currently at 1.3210, is crucial for further upside momentum in the GBP/USD pair.
If the pair manages to close above the 21-SMA, the next target levels to watch are 1.3250 and 1.3300. On the other hand, a failure to sustain above the 21-SMA could push the pair back towards the 50-SMA at 1.3120.
Despite the near-term uncertainties, the Relative Strength Index (RSI) points towards a potential extension of the recovery mode, with a reading near 60.
Analysis and Breakdown:
The current market dynamics suggest a favorable environment for GBP/USD, with the pair showing signs of upward momentum. Factors such as the weakening US Dollar, contrasting central bank policies, and technical indicators like the RSI point towards a potential continuation of the uptrend.
For traders and investors, it is important to monitor key levels such as the 21-SMA and psychological barriers like 1.3250 and 1.3300. These levels can act as significant resistance points or targets for profit-taking, depending on the price action and market sentiment.
In conclusion, the GBP/USD pair is poised for further gains, supported by fundamental and technical factors. Traders should remain vigilant and adapt their strategies based on evolving market conditions to capitalize on potential opportunities in the currency pair.