GBP/USD forecast: is the pound sterling a buy or sell in June?
- The GBP/USD pair has been in a strong bullish momentum in the past few months.
- It is hovering near the highest level since 2018.
- Focus will be on the actions by the Bank of England and Fed.
The GBP/USD is on track for the second consecutive month of gains as investors bet on the recovery of the UK economy. It is trading at 1.4176, which is close to its highest level since April 2018. It has also jumped by more than 24% from its lowest level in 2020.
British pound jumps
The British pound has been in a strong trend in the past few months as investors predict that the UK will have a strong economic recovery.
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Indeed, recent numbers from the UK have been relatively strong. For example, the unemployment rate has dropped to 4.9% while retail sales and inflation have jumped as the country has continued to reopen.
Activities in the manufacturing and services sector has also kept rising in the past few weeks. Indeed, companies like Cineworld that run hundreds of theatre chains in the US have reported strong demand for their services.
The UK is also set to reopen fully in June this year. Barring a resurgence of the pandemic, the country could see strong demand for the economy.
This month, the GBP/USD will react to further data from the United Kingdom. These include numbers like retail sales, inflation, and GDP numbers. Most importantly, it will react to the interest rate decision by the Bank of England (BOE) that will happen on June 24. This will be an important decision since analysts expect that the bank will start winding down its large quantitative easing program.
Meanwhile, the GBP/USD will also react to the happenings in the United States. The biggest mover will be the Federal Reserve interest rate decision that will happen on June 16. Based on the recent comments, the bank will likely maintain its policies unchanged. The pair will also react to the latest US employment, inflation, retail sales, and the ongoing deliberations on stimulus.
The weekly chart shows that the GBP/USD has been in a steady upward trend in the past few weeks. The pair has formed an ascending channel that is shown in red and is also approaching the important resistance level at 1.4380, which was the highest level since April 2018. It is also being supported by the 25-day and 50-day exponential moving averages (EMA).
Therefore, the pair will likely maintain the momentum in June as bulls target the resistance at 1.4380. However, a drop below 1.3670 will invalidate this trend.
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