GBP/USD Continues Upward Trajectory, UK Budget Provides Further Gains

The British Pound has been on an upward trajectory against the US Dollar, with the GBP/USD pair trading in positive territory for the fifth consecutive day, currently hovering around the 1.2735 level during the early Asian session on Thursday, March 7th, 2024. This sustained rally comes amid a weaker US Dollar and encouraging news from the UK's Spring Budget.

Resistance and Support Levels to Watch

The GBP/USD pair's rally, which began from the 1.2518 level, is still ongoing, and the bias for intraday trading remains bullish. Technical analysts suggest that further gains could push the pair towards the 1.2820 zone resistance level. If this resistance is decisively breached, it could potentially reignite the broader upward move that started from the 1.2036 zone low, with the next target being the 1.3140 zone

GBPUSD 1-Day Price Chart. (Source: TradingView)

With the upward momentum gaining, it's crucial to note that for this bullish momentum to remain intact, the 1.2500 support level zone must hold in case of any retreats. In the broader picture, price actions from the 1.3140 medium-term top are seen as a corrective pattern to the uptrend that began from the 1.03565 low in 2022. The current rise from the 1.2037 zone is viewed as the second leg of this pattern, which could still be in progress.

UK Budget, Economic Data, and Fed Speeches Signal Optimism

The UK's Spring Budget presented an optimistic outlook, with Chancellor Jeremy Hunt estimating economic growth of 0.8% in 2024 and 1.9% in 2025, surpassing previous forecasts. This positive projection, coupled with the UK's high-interest rate narrative, has bolstered the Pound Sterling and fueled the GBP/USD pair's upward momentum. 

With the incoming US economic data, including weekly jobless claims, trade balance and the crucial nonfarm payrolls report, as well as Federal Reserve speeches, investors are keeping a close eye for insights into the central bank's policy trajectory, which could influence the pair's future direction.

Technical Outlook Favor Further Gains

From a technical standpoint, the immediate resistance level for the GBP/USD lies around the 1.2820 zone. A break above this level could potentially witness a rally towards the next resistance at the 1.3140 zone. On the downside, the 1.2500 level remains a powerful support area, while the ascending trendline on the daily timeframe also offers a strong support level. Additionally, on lower timeframes, the price may retest the breakout of the bullish flag pattern.

GBPUSD 4-Hour  Price Chart. (Source: TradingView)

The Moving Average Convergence Divergence (MACD) indicator is currently in positive territory, further supporting the bullish momentum. Meanwhile, the Relative Strength Index (RSI) stands at 65.46 as of writing, indicating that the pair is not yet overbought.

As the GBP/USD continues its upward trajectory, driven by a combination of technical factors, a dovish Fed and an optimistic UK budget, traders are closely monitoring the interplay between economic data, central bank rhetoric and technical levels to gauge the pair's future direction.