• GBP/USD has gone into a consolidation phase after having closed in red last week.
  • The near-term technical outlook fails to provide a clear directional clue.
  • The upbeat market mood helps the pound holds its ground early Monday.

GBP/USD has edged slightly higher early Monday after having closed the third straight week in negative territory. The improving risk sentiment helps the British pound stay resilient against its rivals but the near-term technical outlook doesn't yet point to a buildup of bullish momentum.

GBP/USD fluctuated wildly in the second half of the previous week as investors digested the US Federal Reserve and the Bank of England's (BOE) policy decisions. The Fed hiked its policy rate by 75 basis points (bps) and the BOE raised its rate by 25 bps. Both central banks voiced their commitment to stay on the tightening path until they see convincing signs of price pressures easing.

Earlier in the day, UK Junior Treasury Minister Simon Clarke said that they were not expecting the UK economy to tip into recession and argued that the long-term outlook was still "really positive." Although GBP/USD showed no immediate reaction to these comments, the positive shift witnessed in market sentiment seems to be supporting the pair.

Reflecting the upbeat mood, the UK's FTSE 100 Index is up 0.5% in the early European session. It's worth noting that the US stock and bond markets will be closed in observance of the Juneteenth holiday on Monday, suggesting that the market action is likely to remain subdued later in the day.

BOE policymakers Jonathon Haskel and Catherine Mann will be speaking on Monday. In case they suggest that a 50 bps rate hike will be on the table at the next policy meeting, the pair could continue to push higher.

GBP/USD Technical Analysis

The ascending trend line coming from May 15 stays intact and the Relative Strength Index (RSI) on the four-hour chart holds slightly above 50, suggesting that sellers remain on the sidelines for the time being.

On the upside, the 50-period SMA forms first resistance at 1.2270 ahead of 1.2300 (psychological level, Fibonacci 50% retracement of the latest downtrend). A four-hour close above the latter could be seen as a significant bullish development and trigger another leg higher toward 1.2370 (Fibonacci 61.8% retracement).

1.2220 (Fibonacci 38.2% retracement, ascending trend line, 20-period SMA) forms initial support before 1.2130 (Fibonacci 23.6% retracement) and 1.2100 (psychological level). 

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