GBP/USD: Bullish channel breakout and overbought conditions favor buying dip – BofA

Bank of America Global Research discusses GBP/USD technical outlook and likes buying dips in Q1.

“In late November and December we liked buying GBP at 1.32 for a
rally to the 1.35s due to a variety of technical conditions. Since then
GBP/USD has rallied and broke out above the channel with strong momentum
to confirm the break. However the trend turned down from resistance at
the 200d SMA as overbought conditions begin to correct,” BofA notes.

“The weekly chart of GBP/USD formed a head and shoulders bottom in 2020,
broke above trend lines beginning in 2008 to change the long term trend
from down to up and has successfully retested/rallied from the support
zone in the 1.32s. Now GBP/USD is breaking out of a bull flag
pattern with a bullish MACD cross. We think GBP/USD has medium term
upside while above the 1.32s which can equate to a rally above the 2021
highs,” BofA adds.