GBP/USD Forex Signal: More Upside But a Retest of 1.200 Likely – 21 March 2023
The GBP/USD pair has been in a strong bullish trend after it fell to a low of 1.1803 on March 8.
The GBP/USD price continued soaring as the financial market took a reprieve following the failure of Credit Suisse, the second-biggest bank in Switzerland. Sterling jumped to a high of 1.2273, the highest point since February 2nd of this year.
The GBP/USD exchange rate continued recovering as the market reacted to the banking crisis. In Europe, most bank stocks dropped sharply after Swiss authorities pushed a deal to combine the two biggest banks. UBS acquired the company for $3.3 billion, sharply lower than where it was on Friday.
In the US, authorities were working to save First Republic Bank, a company that has received numerous credit rating downgrades in the past few weeks. The concern is that most of the company’s clients are not insured, which could lead to further outflows.
Still, the American stock market did well as a sense of optimism spread. The Dow Jones added over 300 points while the S&P 500 and Nasdaq 100 indices jumped by over 0.80%. Meanwhile, bond yields continued rising, with the 10-year and 2-year rising to 3.49% and 3.9%, respectively. The US dollar index drifted downwards to $103.
The only data scheduled on Tuesday will be the latest US existing home sales data. Economists expect the data to show that existing home sales rose from 4 million to 4.17 million in February. While these numbers are important, their impact on the GBP/USD pair will be minimal.
Instead, the focus among traders will be on the upcoming interest rate decisions by the Fed and Bank of England that are scheduled for Wednesday and Thursday, respectively. The UK will also publish important consumer and producer inflation data on Wednesday.
The GBP/USD pair has been in a strong bullish trend after it fell to a low of 1.1803 on March 8. On the 4H chart, the pair managed to cross the important resistance point at 1.2200, the highest point on March 14. By moving above that level, it invalidated the double-top pattern.
It has also jumped above the 50% Fibonacci Retracement point and the 25-day and 50-day exponential moving averages (EMA). The Relative Strength Index (RSI) has moved to the overbought level. Therefore, the pair will likely continue rising, with the next point to watch being at 1.2400. A retest of 1.2200 cannot be ruled out during this uptrend.