GBP/USD Price Analysis: Sits near multi-month tops, around mid-1.4100s ahead of BoE’s Bailey

• GBP/USD edged higher for the third straight session and inched back closer to the overnight highs.
• The emergence of some fresh selling around the USD was seen as a key factor lending some support.
• The set-up remains in favour of bullish traders and supports prospects for additional near-term gains.

The GBP/USD pair gained some positive traction for the third consecutive session on Tuesday and was last seen hovering just below two-and-half-month tops, around mid-1.4100s.

The intraday uptick was sponsored by the emergence of some fresh selling around the US dollar, which languished near the lowest level since February 25 amid dovish Fed expectations. Even a modest uptick in the US Treasury bond yields and the prevalent risk-off mood failed to lend any support to the safe-haven USD.

On the other hand, a sharp drop in COVID-19 deaths and new cases, along with the gradual reopening of the UK economy continued acting as a tailwind for the British pound. Apart from this, the receding risk of an imminent Scottish referendum on independence from the UK extended some additional support to the GBP/USD pair.

From a technical perspective, the overnight upsurge validated a bullish breakout through a strong horizontal resistance near the key 1.4000 psychological mark. A subsequent strength beyond the 1.4100 mark supports prospects for an extension of the recent appreciating move witnessed over the past one month or so.

Meanwhile, RSI (14) on the daily chart has moved on the verge of breaking into the overbought territory. This, in turn, held bullish traders from placing fresh bets and might cap the upside for the GBP/USD pair. Investors also preferred to wait on the sidelines ahead of a scheduled speech by the BoE Governor Andrew Bailey.

Nevertheless, the GBP/USD pair still seems poised to aim back to reclaim the 1.4200 mark and climb further towards challenging YTD tops, around the 1.4235 area. Some follow-through buying should pave the way for a further near-term appreciating move towards the 1.4300 mark en-route 2018 yearly tops, around the 1.4375 region.

On the flip side, the 1.4100 mark might now protect the immediate downside. Any subsequent decline might be seen as an opportunity to initiate fresh bullish positions near the 1.4045-40 region. This, in turn, should help limit the downside near the 1.4000 strong resistance breakpoint, now turned support.

GBP/USD daily chart

Technical levels to watch