- Cable put a lid on Tuesday’s losses and recovers some ground, gaining 0.42% in the week.
- A positive market sentiment boosts the prospects for GBP, despite a strong US Dollar.
- GBP/USD Price Forecast: A break above 1.2700 could lead to 1.3000.
- Further downward pressure might enter the market if the major trades below 1.2470.
The British pound recovers some ground on Wednesday during the North American session, bouncing near weekly lows around 1.2480s and back above the 1.2500 figure. At 1.2545, the GBP/USD grinds higher due to an improved market mood.
Market sentiment boosts GBP's prospects
Invertors’ shrugged off Federal Reserve concerns that aggressive tightening might cause a recession. On Tuesday, Atlanta’s Fed President Raphael Bostic, who leans towards the hawkish end of the spectrum, sounded dovish, saying that the US central bank might pause its tightening cycle once rates hit the 2% threshold so the central bank can witness how the economy behaves.
Meanwhile, global equities pare some of their weekly losses, reflecting the upbeat move while the greenback rises. The US Dollar Index, a measurement of the buck’s value against a basket of six currencies, reclaims the 102.000 mark, gaining 0.40%, putting a lid on the GBP/USD rally. The US 10-year Treasury yield remains flat around the 2.752% mark.
The US economic docket featured housing data, which came in mixed but tilted positively, despite concerns about the US's growing economic outlook. Later, April’s Durable Goods Orders grew at a slower pace than foreseen but kept positive. At around 18:00 GMT, the Federal Reserve will unveil its May minutes, giving traders additional clues regarding the US central bank monetary policy plans.
In the meantime, the Atlanta Fed GDP Now, the projection of US GDP for the second quarter, rose to 1.8%, lower than the previous reading, which came in at 2.1%.
An absent UK docket leaves GBP/USD traders adrift to BoE-speak led by its Chief Economist Huw Pill. Earlier, Pill said that too much tightening runs the risk of getting stuck in a deep recession, but too little tightening runs the risk of inflation gaining self-sustaining momentum. Pill's remarks came a day after a raft of downbeat UK PMI data, which reignited fears about a UK economic slowdown, threatening to keep the central bank from further tightening monetary conditions.
GBP/USD Price Forecast: Technical outlook
The GBP/USD is downward biased, albeit recovering some ground. Nevertheless, a solid resistance area looms at the May 4 daily highs near 1.2638, a resistance just shy of a four-month-old downsloping trendline that passes above 1.2700. That ceiling area would be difficult to overcome for GBP/USD bulls, but once cleared, a re-test of the 1.3000 area is on the cards. Otherwise, a break below 1.2470 would expose the major to further selling pressure that could send the pair for a re-test of the YTD lows at around 1.2155.
|Today last price||1.2545|
|Today Daily Change||0.0012|
|Today Daily Change %||0.10|
|Today daily open||1.2532|
|Previous Daily High||1.2599|
|Previous Daily Low||1.2472|
|Previous Weekly High||1.2525|
|Previous Weekly Low||1.2217|
|Previous Monthly High||1.3167|
|Previous Monthly Low||1.2411|
|Daily Fibonacci 38.2%||1.252|
|Daily Fibonacci 61.8%||1.255|
|Daily Pivot Point S1||1.247|
|Daily Pivot Point S2||1.2407|
|Daily Pivot Point S3||1.2343|
|Daily Pivot Point R1||1.2597|
|Daily Pivot Point R2||1.2661|
|Daily Pivot Point R3||1.2723|
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.