The GBP/USD pair found buyers near 1.2710 levels in the overnight trades, and since then has entered a phase of downside consolidation, as investors await the release of BOE’s Financial Stability Report (FSR) and Governor Carney’s speech for the next direction.
GBP/USD capped below daily pivot at 1.2729
The subdued trading activity seen behind cable is mainly driven by increased cautiousness, as investors remain wary over the outcome of the BOE FSR report on the financial markets, in the wake of the UK election and Brexit uncertainty.
Moreover, mixed sentiment prevalent around the Asian markets, with investors fearing that the Fed may continue with its policy normalization plans, as suggested by the Bank for International Settlements (BIS) report released over the weekend.
Meanwhile, the US dollar is reversing yesterday’s late-rebound, backed by Trump administration’s victory over the travel ban, which helps keep the spot underpinned. Also, the pound remains buoyed after yesterday’s reports of the UK May’s Conservatives Party having struck a deal with the DUP to form a minority government.
Looking ahead, the immediate focus remains on the BOE FSR and Carney’s speech, which will be followed by the CBI realized sales data during the European session. Meanwhile, the US docket also remains eventful, with the CB consumer confidence data and speeches by the FOMC officials Harker and Yellen.
GBP/USD levels to consider
Valeria Bednarik, Chief Analyst at FXStreet offers key technical levels for the spot: “Technically, the 4 hours chart shows that intraday slides were contained by buying interest around a bullish 20 SMA, now around 1.2705 the immediate support, whilst the Momentum indicator remains directionless within positive territory, and the RSI retreats, currently around 52, overall suggesting the pair can end its rallying streak this Tuesday. Support levels: 1.2705 1.2665 1.2635 Resistance levels: 1.2760 1.2800 1.2840.”
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