GBP/USD bounces-back towards 1.4300 on aggressive USD selling

  • Pound underpinned by the outlook for rising wages and BOE rate hike.
  • Broad-based USD selling prevails ahead of the US retail sales report.

The GBP/USD pair staged a V-shaped reversal in the last hour and looks to regain the 1.43 handle, having found solid support once again near the 1.4235 region, where the daily lows coincide.

The latest leg up in the spot can be mainly attributed to a fresh bout of selling interest seen around the US dollar, as markets readjust their positions ahead of the key US retail sales data and fresh political developments surrounding the US-Russia conflict.

More so, optimism over the UK wage growth coupled with rising expectations of a Bank of England (BOE) rate hike next month, also collaborates to the buoyant tone seen around the pound, as all eyes remain focused on a big UK macro week ahead. The UK jobs, CPI and retail sales data are due on the cards this week, which will provide fresh momentum on the prices.

GBP/USD levels to watch

Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers, explains, “bulls need a break and close above psychological 1.4300 barrier to neutralize downside risk and open way for test of key mid-term barrier at 1.4244 (25 Jan post-Brexit recovery high).Meanwhile, the pair may hold in extended consolidation, with downside remaining at risk, while bearish scenario on a close below 1.4220 would open the way for deeper pullback and expose supports at 1.4170 (Fibo 38.2% of 1.3965/1.4296) and 1.4141 (rising 10SMA). Res: 1.4268; 1.4277; 1.4300; 1.4345. Sup: 1.4230; 1.4200; 1.4170; 1.4141.”

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