- GBP/USD has gone into a consolidation phase near 1.2300.
- US Dollar could hold its ground if markets turn cautious.
- Pound Sterling continues to trade above key support levels.
GBP/USD has lost its bullish momentum after having touched its highest level in over five months at 1.2345 during the European trading hours on Monday. The pair's near-term technical outlook suggests that the bullish bias stays intact but the Pound Sterling could have a hard time gathering strength if the market mood sours during the American trading hours.
With several cities in China deciding to ease coronavirus curbs over the weekend, risk flows dominated the financial markets at the beginning of the week and the US Dollar struggled to find demand. Nevertheless, US stock index futures are down between 0.2% and 0.3% during the European trading hours, suggesting that investors could adopt a cautious stance if Wall Street's main indexes start the week in negative territory.
There won't be any high-impact macroeconomic data releases from the UK and the US Dollar's market valuation is likely to continue to drive the pair's action.
The US economic docket will feature the ISM's Services PMI report on Monday. The inflation component of the survey, the Prices Paid Index, is forecast to rise to 73.6 in November from 70.7 in October. If the report shows that input price inflation in the service sector continued to rise at an accelerating pace, the US Dollar could stay resilient against its rivals and weigh on GBP/USD. The headline PMI is expected to edge lower to 53.1 from 54.4. A reading below 50 is likely to trigger a fresh US Dollar selloff and provide a boost to the pair.
GBP/USD Technical Analysis
GBP/USD continues to trade within the ascending regression channel coming from November 9 and the Relative Strength Index (RSI) indicator on the four-hour chart holds comfortably above 60, confirming the bullish bias.
On the upside, interim resistance seems to have formed at 1.2345/50 (daily high, upper limit of the ascending channel) ahead of 1.2400 (psychological level) and 1.2475 (static level, former support).
In case GBP/USD falls below 1.2240 (mid-point of the ascending channel), it could extend its correction toward 1.2200 (psychological level, 20-period Simple Moving Average (SMA)) and 1.2150 (200-day SMA, lower limit of the ascending channel).
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 trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800, as traders lack directional impetus amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold reaches to all-time highs near $2,230, US PCE eyed
Gold price appreciates to all-time highs near $2,230 per troy ounce, attempting to continue its winning streak for the fifth successive session on Friday. However, trading volumes are light as market participants are likely observing Good Friday.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.