GBP/USD rally losses strength near 1.4000

• GBP/USD accelerated to the upside after breaking key technical levels
• Pound heads for highest close in two weeks.
• Rally supported by a weak USD.

GBP/USD extended gains during the US session and reached a fresh 2-week high at 1.3993. Afterward pulled back modestly and it was trading at 1.3965/70, up more than 50 pips for the day.

A weak US dollar across the board boosted the pair. The greenback started to slide after US inflation data (no positive surprise) and following political news from the US with President Trump selecting Mike Pompeo as Secretary of State, replacing Rex Tillerson.

In the UK, the Office for Budget Responsibility offered new economic projections and revised upwards GDP estimates for 2018. It helped the pound during the European session.

GBP/USD breaks key technical level

The pound is headed for the third gain in a row but today’s rally so far is being particularity positive from a technical perspective. GBP/USD broke a downtrend line from January highs and also consolidated on top of 1.3900.

The bullish tone remains intact although the rally stopped below 1.4000. The 1.4000 is a strong resistance area, also a psychological level. A break above would clear the way to more gains.

A slide back below 1.3950 would remove most of the short-term positive tone for the pound. Below support levels lie at 1.3915 and 1.3870. A relevant level is the uptrend line from February lows that stands at 1.3830 that is supporting the current up-move.