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Feb 25 - 11:55 AM

GBP/USD - COMMENT-Sterling's Shallow Dip Should Keep Focus On New Highs

By Paul Spirgel  —  Feb 25 - 10:11 AM

Sterling rebounded in early U.S. trade and the shallow dip that preceded the bounce suggests bulls will remain focused on regaining recent 34-month highs above 1.42.

The pound managed to stay out of the spotlight as EUR/USD dominated trade after German and euro zone sentiment indicators beat forecasts.

Recent GBP/USD gains have been predicated on upbeat UK growth views based on Britain's rapid vaccine rollout, easing lockdown and fading Brexit anxieties.

While the upbeat euro zone data inhibited sterling gains, recentdovish testimony by Fed Chair Jerome Powell highlighting a lengthy outlook for steady near-zero rates has renewed downward pressure on the dollar, to the pound's benefit.

GBP/USD's rise above upper 30-day, week and monthly Bollis reflect sterling's bullish bias, though widening Bolli's indicate the potential for increased volatility nL1N2KU0RE, backed up by vol prices rising as cable rises to new highs GBPVOL=.

GBP/USD resistance at Wednesday highs by 1.4295 is likely to cap price in the near-term, with a break below 10-day moving average support at 1.3998 needed to diminish the current bullish ardor.
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Source:
Refinitiv IFR Research/Market Commentary

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