- GBP/USD has managed to shake off the bearish pressure.
- Renewed dollar weakness helps the pair push higher on Thursday.
- April Pending Home Sales data from the US could have an impact on risk perception.
GBP/USD has gathered bullish momentum on Thursday and climbed above 1.2600. The pair was last seen testing the key resistance level located near 1.2620 and a four-hour close above that level could be taken as a bullish sign.
The selling pressure surrounding the greenback is helping GBP/USD push higher. The US Dollar Index stays in negative territory below 102.00 in the European trading hours as US Treasury bond yields extend the weekly slide toward 2.7%.
On Wednesday, the minutes of the FOMC's May policy meeting showed that policymakers saw it appropriate for the US central bank to hike its policy rate by a total of 100 basis points at the next two policy meetings. The publication didn't offer any details surrounding the Fed's balance sheet reduction plan but revealed that participants saw inflation risks skewed to the upside.
In the second half of the day, April Pending Home Sales data from the US will be watched closely by market participants. The market consensus points to a 2% decline in April and a bigger-than-forecast drop could cause investors to seek refuge. Although the British pound is likely to have a difficult time finding demand in that scenario, another leg lower in US yields should limit the pair's downside
In the meantime, the market reaction to the political jitters in the UK remains muted for the time being. Two lawmakers from Prime Minister Boris Johnson's Conservative Party announced that they pulled their support over the 'partygate' scandal. In case political tensions continue to rise in the UK, the pound could struggle to continue to gather strength.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart rose above 60, suggesting that buyers retain control of the pair's action. In case GBP/USD rises above 1.2620 (200-period SMA) and confirms that level as support, additional gains toward 1.2650 (static level) and 1.2700 (psychological level) could be witnessed.
On the flip side, the ascending trend line coming from mid-May forms significant support at 1.2600. When the pair dropped below that line earlier in the week, it lost 50 pips before reclaiming it. Hence, a four-hour close below 1.2600 could force buyers to move to the sidelines and cause the pair to drop toward 1.2550 (20-period SMA) and 1.2500 (psychological level, 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 rebounds from multi-week lows, trades above 1.0750
EUR/USD came under heavy bearish pressure and declined to its weakest level in three weeks below 1.0750 on Friday after the stronger-than-expected Nonfarm Payrolls data. Week-end flows, however, helped the pair erase its daily losses.
GBP/USD remains on track to snap three-week winning streak
GBP/USD recovered toward 1.2550 after coming in within a touching distance of 1.2500 in the second half of the day after Nonfarm Payrolls came in at 199,000 for November. Despite the recent rebound, the pair remains on track to snap a three-week winning streak.
Gold retreats below $2,020 as US yields push higher
Gold broke below its daily range and declined toward $2,010 with the immediate reaction to the upbeat US November jobs report. Although XAU/USD managed to recover toward $2,020, rising US Treasury bond yields triggered another leg lower.
Bitcoin price could retrace to $42,000 if US Nonfarm Payroll comes in at 180,000
Bitcoin price just like other assets, is highly impacted by the macro-financial developments. This includes the Nonfarm Payrolls (NFP) report released by the BLS of the United States.
The week ahead – Fed, ECB and Bank of England rate decisions
When the Federal Reserve kept rates unchanged back in November for the second meeting in a row there was still the distinct possibility that the final meeting of 2023 would provide the possibility of one more rate rise to round off the year in line with Fed policymakers dot plot forecasts of 5.6%.