The British currency, having gathered strength, moved to storm the next peak. The current target for the pound is 1.3600.
Sterling started the current week on a minor note, dropping 0.1% to 1.3526. The downward trend continued until the middle of the week, but then the situation changed. On Tuesday evening, the GBP/USD pair increased by 50 points, moving away from previous lows. At the end of the trading session, the pound sterling soared to an impressive level of 1.3550.
On Wednesday, February 9, the situation stabilized. The British currency felt support near 1.3535. During the day, bulls went on the offensive, trying to break through the mirror level of 1.3568. This attempt was successful. The GBP/USD pair rose to 1.3584, but could not hold on to the positions it had won.
Experts recorded an increase in bullish sentiment in the GBP/USD pair, which has added 0.35% since the beginning of the day. As a result, the barrier of 1.3585 was passed, thanks to which the pound rushed to a new target - 1.3600. Note that the British currency has a close correlation with the dynamics of the stock market. Against this background, the growth of key global indices supports the buyers of the pound.
According to some analysts, reaching the level of 1.3600 is possible if the short-term resistance level near 1.3560 becomes support for the GBP/USD pair. At the same time, the steady growth of the stock market and leading indices will allow the pound to test the level of 1.3750.
The gradual appreciation of the pound was facilitated by expectations of a tightening of the monetary policy of the Fed and the ECB, as well as the confident position of the Bank of England on the issue of raising the key rate. According to experts, the current position of the British regulator suggests a more decisive increase in rates than other central banks. These measures will ensure the inflow of carry trade into the pound, thanks to which the British currency will continue to grow.
The recovery of risk appetite capped the greenback's gains and helped the sterling rise. However, the pound faced obstacles along the way due to Brexit-related issues. The upward trend of the GBP/USD pair is hampered by tensions with the EU and Northern Ireland. The UK authorities still cannot reach an agreement on the Northern Ireland protocol. The negative impact of Brexit is holding back the upside potential of the GBP.
Experts recommend to postpone the opening of long positions on the pound until the release of key economic releases from the UK. Updated macro data is expected on Friday, February 11th. The upcoming rise in the key rate is of decisive importance for the sterling as well as for the dollar. The speed and timing with which the world's central banks have launched a cycle of interest rate increases are the main driving forces behind the foreign exchange market. This applies to the Fed, the ECB and the Bank of England. According to experts, the current strategy of regulators will benefit national currencies.
