GBP/USD Forecast: Bulls retain control, break above 1.3710 likely

GBP/USD Current price: 1.3666

• Brexit-related relief provides support to the British Sterling.
• Coronavirus concerns may put a halt to the pound’s rally.
• GBP/USD is technically bullish, it could correct lower before resuming its advance.

The GBP/USD pair held on to gains and settled a handful of pips below 1.3685, a fresh multi-year high set on Thursday. The sterling remained supported by relief after the EU and the UK clinched a post-Brexit deal just one week before the end of the transition period. The agreement has several flaws but avoided a no-deal exit.  Once the dust settles on the issue, market players may turn their eyes to economic developments.

So far, the UK has endured quite well with the pandemic and even started vaccination. Nevertheless, the virus has forced the government to impose tough restrictive measures, which may affect economic developments in the first quarter of the year. This Monday, the UK will publish November money figures, while Markit will release the December Manufacturing PMI, foreseen unchanged at 57.3.  

GBP/USD short-term technical outlook

The GBP/USD pair is poised to extend its advance, according to the daily chart, as technical indicators maintain their upward slopes near overbought readings. Moving averages head north far below the current level, with the 20 SMA currently at around 1.3450. In the near-term, the pair is also advancing beyond bullish moving averages, although technical indicators directionless, consolidating in overbought readings, indicating hesitating buying interest at the current levels. Nevertheless, bulls are in the driver´s seat, and buyers may surge on corrective declines.

 Support levels: 1.3625 1.3570 1.3515  

Resistance levels: 1.3710 1.3765 1.3820

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