GBP/USD outlook: the pair in an upward channel

The British pound rolled back slightly during the trading session on Tuesday but then went up again to its highest level in nearly three weeks. On Tuesday, the pound rose more than 1% in the hope that British PM Theresa May would make progress in seeking changes in the deal with the European Union.

On Tuesday, the dollar fell against a basket of other currencies, as traders reduced their safe positions in US dollars in optimistic mood that a new round of negotiations between China and the United States would help resolve their trade conflict.

The dollar is bound in movement amid falling yields in the United States and before the publication of the minutes of the Fed meeting. The minutes of its January meeting on monetary policy will be published on Wednesday as planned, although its offices in Washington will be closed due to bad weather.

GBP/USD Technical Analysis

The British Pound formed a strong support near the 1.2800 zone and later surged higher against the US Dollar. The GBP/USD pair broke the 1.2880 resistance area to move into a positive zone.

Buyers pushed the pair above the 1.3000 resistance and the 50 hourly simple moving average. The pair recently traded above the 1.3050 level and formed a new weekly high at 1.3076.

At the moment, the pair is consolidating gains and it could test the 23.6% Fib retracement level of the recent wave from the 1.2902 low to 1.3076 high.

However, there are many supports on the downside near the 1.3040 and 1.3020 levels. The main support could be 1.3000 and the 50% Fib retracement level of the recent wave from the 1.2902 low to 1.3076 high. On the upside, the main hurdles for buyers are near 1.3080 and 1.3110.