- GBP/USD trades slightly below 1.2600 in the early European session on Tuesday.
- BoE Governor Bailey and other MPC members will testify on policy decisions.
- The near-term technical outlook points to a bearish tilt.
After edging higher during the European trading hours, GBP/USD lost its traction and closed the first day of the week flat near 1.2600. The pair stays on the back foot early Tuesday and trades slightly below that level.
Bank of England (BoE) Governor Andrew Bailey, Deputy Governor Ben Broadbent and Monetary Policy Committee (MPC) members Swati Dhingra and Megan Greene will testify before the UK Treasury Select Committee starting at 10:15 GMT on Tuesday.
"MPs are likely to ask witnesses about the future path of inflation, whether risks of over-tightening monetary policy have increased since the November forecast, and their views on the future of wage growth," the Treasury Select Committee notes.
Earlier in the day, Goldman Sachs said that they are now expecting the BoE to lower the policy rate in June rather than May. The market positioning suggests that there is a nearly 60% probability of a 25 basis points (bps) reduction in the BoE's interest rate.
In case Bailey adopts an optimistic tone about the inflation outlook and opens the door for a policy pivot as early as June, the market positioning suggests that there is room for Pound Sterling weakness. On the other hand, GBP/USD could stretch higher in case Bailey, or other policymakers, pushes back against the market expectations for a rate cut in early summer.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart declined slightly below 50 and GBP/USD closed the last two 4-hour candles below the 20-period and the 50-period Simple Moving Averages (SMA), reflecting a lack of buyer interest in Pound Sterling. 1.2600 (50-period SMA) aligns as immediate resistance ahead of 1.2630-1.2640 (100-period SMA, Fibonacci 23.6% retracement of the latest uptrend) and 1.2670 (200-period SMA).
On the downside, supports are located at 1.2540 (Fibonacci 38.2% retracement), 1.2520 (static level) 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 struggles to recover above 1.1000 ahead of Fedspeak
EUR/USD holds ground on upbeat German Industrial Production data on Tuesday but finds it difficult to clear the 1.1000 hurdle. In the absence of high-tier macroeconomic data releases from the US, investors will pay close attention to comments from central bankers.
GBP/USD holds steady near 1.3100 as mood sours
GBP/USD trades in a tight channel at around 1.3100 following Monday's decline. The negative shift seen in risk mood doesn't allow the pair to gather recovery momentum as investors await comments from Federal Reserve policymakers.
Gold recovers from weekly lows, trades near $2,650
After falling to a fresh weekly low below $2,630 earlier in the day, Gold gains traction and recovers to the $2,650 area. The precious metal benefits from the negative shift seen in risk mood as geopolitical tensions remain high.
Ripple price shows signs of weakness
Ripple price stabilizes around $0.530 and trades within a tight range for the fourth day in a row on Tuesday. After breaking below its ascending trendline last week, XRP’s price was rejected from its daily resistance level on Monday.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.