The downside correction in GBP/USD pair gathers steam after a brief phase of consolidation around 1.2270in early dealings, now pushing the rate below the mid-point of 1.22 handle.
The spot ran into resistances lined up just below 1.23 handle, and resumed its corrective slide amid broad based US dollar recovery, after the steep sell-off triggered by a less-hawkish Fed decision, which dashed hopes of acceleration in the pace of monetary policy tightening by the Fed.
Moreover, a solid rebound staged by treasury yields curbs demand for the GBP as an alternative higher-yielding currency and hence, collaborates to the renewed downside in the major.
However, a risk-on rally in the European equities may help cushion the losses in GBP/USD, as all eyes remain focused on the upcoming BOE policy decision, with most analysts expecting the British central bank to maintain a status-quo today.
GBP/USD Levels to consider
Karen Jones, Analyst at Commerzbank notes, “GBP/USD near term outlook is neutralizing: Sterling failed to close below the 78.6% retracement at 1.2142, for 6 days and has reversed near term. It has based near term and is likely to re test the 55 and 100 day ma at 1.2374/1.2407. Above here initial resistance is 1.2583 (9th Feb high). However only above 1.2658 channel would allow for further strength to the 1.2776 December high. Between here and 1.2836 lies several Fibonacci retracements and major resistance and we suspect that it will fail here.”
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