The Brexit transition deal put a bid under the British Pound yesterday, pushing the GBP/USD pair above 1.40 in a convincing manner. What becomes of the bears? Gain insight on the 20 March GBPUSD Technical Analysis.
20 March, GKFX – The bears are in trouble as the deal may allow the Bank of England (BOE) to adopt a more aggressive stance on policy tightening. Further, the bull flag breakout on the daily chart indicates scope for a re-test of 1.4345 (Jan. 25 high). The relative strength index (RSI) is biased bullish.
UK February core CPI
So, the bulls seem to have regained control and will likely push the GBP/USD pair to 1.41 if the UK February core CPI betters estimate of 2.5 percent year-on-year. The data is scheduled for release at 09:30 GMT. Moreover, a big beat on the inflation number would boost the odds of a BOE rate hike in May.
On the other hand, a weak print could yield a pullback in the cable. That said, the drop could be short-lived, courtesy of the optimism generated by the Brexit transition deal.
20 March GBPUSD Technical Analysis
As of writing, the spot is trading at 1.4038. A close above 1.4070 (Feb. 26 high) would add credence to the bullish flag breakout and yield rally to 1.4278 (Feb. 2 high) and 1.4345 (Jan. 25 high).
On the other hand, a move below 1.40 (psychological level) would allow a pullback to 1..3932 (10-day MA) and 1.3909 (21-day MA).
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