- GBP/USD has gone into a consolidation phase following Monday's rebound.
- Lack of fundamental drivers allows GBP/USD to trade between technical levels.
- Dollar is having a tough time regaining its traction.
GBP/USD has staged a decisive recovery on Monday and erased a large portion of last week's losses before going into a consolidation phase on Tuesday.
In the absence of high-tier macroeconomic data releases and fresh headlines surrounding Brexit, GBP/USD's next direction is likely to be dictated by technical developments.
While speaking at a virtual event organized by the Bank of England (BoE), Governor Andrew Bailey reiterated that they will have to act with rates in case they see clear evidence of higher inflation feeding into wages. These comments don't seem to be having a noticeable impact on the market pricing of a rate hike in December. As it currently stands, the CME Group's BoEWatch Tool shows a 67.5% chance of a 20 basis points rate hike before the end of the year.
Meanwhile, the EU is waiting for the UK to make the next move in Brexit negotiations after clarifying that they will match the scale of the action in case Britain were to trigger Article 16.
Later in the session, the US Bureau of Labor Statistics will release the Producer Price Index (PPI) data for November, which is unlikely to offer any surprises. FOMC Chairman Jerome Powell and BoE's Bailey will be speaking at an event on Tuesday but it would be surprising to see any remarks on the policy outlook.
GBP/USD Technical Analysis
Currently, GBP/USD is trading near 1.3570 (Fibonacci 61.8% retracement of the latest uptrend). However, the last four candles on the four-hour chart closed below that level and the Relative Strength Index (RSI) indicator is moving sideways near 50, suggesting that the pair is struggling to gather bullish momentum.
In case GBP/USD climbs above 1.3570 and confirms it as support, it could target 1.3630 /Fibonacci 50% retracement, 50-period SMA) and 1.3660 (200-period SMA).
On the downside, the 20-period SMA forms the initial support at 1.3520 ahead of 1.3500 (psychological level) and 1.3475 (static level).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD holds positive ground above 1.0750 ahead of Eurozone PMI, PPI data
EUR/USD trades in positive territory for the fourth consecutive day near 1.0765 during the early Monday. The softer US Dollar provides some support to the major pair.
GBP/USD rises to near 1.2550 due to dovish sentiment surrounding Fed
GBP/USD continues its winning streak for the fourth consecutive day, trading around 1.2550 during the Asian trading hours on Monday. The appreciation of the pair could be attributed to the recalibrated expectations for the Fed's interest rate cuts in 2024 following the release of lower-than-expected US jobs data.
Gold price rebounds on downbeat NFP data, softer US Dollar
Gold price snaps the two-day losing streak during the Asian session on Monday. The weaker-than-expected US employment reports have boosted the odds of a September rate cut from the US Federal Reserve. This, in turn, has dragged the US Dollar lower and lifted the USD-denominated gold.
Bitcoin Cash could become a Cardano partnerchain as 66% of 11.3K voters say “Aye”
Bitcoin Cash is the current mania in the Cardano ecosystem following a proposal by the network’s executive inviting the public to vote on X, about a possible integration.
Week ahead: BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.