- GBP/USD has advanced above 1.2300 following the decline in Asian session.
- Sellers could take action if the pair drops below 1.2260.
- Investors are concerned above energy inflation on rising crude oil prices.
GBP/USD has started the new week under bearish pressure and declined below 1.2300 before staging a rebound in the European morning. The pair could have a difficult time regaining its traction unless the market mood improves later in the day.
Investors are concerned about rising crude oil prices causing energy inflation to remain uncomfortably high. The decision by some OPEC+ producers to voluntarily reduce output by a total of more than 1 million barrels per day until the end of the year caused crude oil prices to surge higher at the beginning of the week. The barrel of Brent was last seen rising more than 6% on the day at $84.50.
In case safe-haven flows drive the action in financial markets in the second half of the day, the US Dollar could continue to gather strength and weigh on GBP/USD. As of writing, S&P 500 Futures were down 0.15% on the day while Dow Futures were up 0.3%.
Meanwhile, the CME Group FedWatch Tool shows that the probability of a 25 basis points Federal Reserve (Fed) rate hike in May rose above 60% from 48% on Friday.
Later in the day, hawkish Fed bets could help the USD find demand in case the ISM Manufacturing PMI survey reveals an increase in the sector's input inflation. The Priced Paid Index is forecast to edge higher to 53.8 in March from 51.3 in February. On the flip side, a decisive rebound above 50 in the headline PMI, which is expected to come in at 47.5, could help the risk sentiment to improve and limit the USD's upside.
GBP/USD Technical Analysis
In case GBP/USD confirms 1.2300 as resistance, the next key support is located at 1.2260 (Fibonacci 23.6% retracement) before 1.2230 (100-period Simple Moving Average (SMA)) and 1.2200 (psychological level).
On the upside, 1.2350 (static level, 20-period SMA), aligns as first resistance ahead of 1.2400 (end-point of the latest uptrend) and 1.2420 (multi-month high set on March 31).
It's worth noting that the Relative Strength Index (RSI) indicator on the four-hour chart struggles to rise above 50, highlighting buyers' hesitancy for the time being.
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 retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.