GBP/USD: how far can the bulls go?
British pound benefitted from the broad-based USD weakness last week. GBP/USD surged by more than 400 pips, approaching the 1.5500 resistance – this is the February high. There are a lot of sell-orders clustered in this area, so we expect a pullback to follow in the coming days. Daily RSI confirms that the market has already become overbought. Support is seen at 1.5200 and 1.5080.
It's interesting that the pound was massively bought despite the mixed bag of data coming out. US economy rose by only 0.3% in Q1, while retail sales dropped by 0.5% in March. Parliamentary election on May 7 will likely become a good fundamental reason to sell the cable. According to the most recent surveys, Conservative party pushed a bit forward, but the overweight remains small and unstable. Next week we’ll also watch the UK April PMI indices.