Sterling's uptrend looks to be in a healthy consolidation phase, poised for further gains towards the 2021 high, unless arout on Wall Street or a surge in U.S. Treasury yields causesthe safe-haven dollar to jump.
The UK economy is rebounding solidly as Wednesday's GDP data illustrated nL8N2MZ209.
The fast vaccine rollout has helped England's coronavirus infections halve since March nL1N2MZ2OU. Bank of England Governor Andrew Bailey appears to be in the same camp as the U.S. Federal Reserve chair, in not expecting current inflation pressures to persist nL9N2KU02Q.
The UK fundamentals look good, though there are Brexit-related issues on Northern Ireland nL8N2N04QX, fishing nL8N2N03CQ and financial services nL8N2M7482.
Positioning is always key for sterling, and Morgan Stanley's FX Positioning Tracker showed sterling positioning as only modestly long on May 10, so it's not a significant driver at present.
Charts show 5, 10 and 21 daily and weekly moving averages, plus 21-day Bollinger bands heading north, which is a strong trending setup, after cable traded above the upper 21-day Bollinger band, a good indicator of an overbought market, earlier in the week.
The current move targets a test of the 1.4240 2021 high.
A close below the rising 1.3949 21 DMA would undermine the topside bias.
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