- GBP/USD built on the previous day’s solid rebound from one-and-half-week lows.
- Expectations for additional measures from the UK budget benefitted the sterling.
- A softer USD provided an additional boost and remained supportive of the uptick.
The GBP/USD pair refreshed weekly tops during the early European session, with bulls now awaiting a sustained move beyond the key 1.4000 psychological mark.
The pair gained traction through the first half of the trading action on Wednesday and has now rallied nearly 150 pips from one-and-half-week lows, around the 1.3860-55 region touched in the previous day. The British pound was supported by expectations that UK finance minister Rishi Sunak will announce measures to safeguard businesses and jobs. Hence, the focus will remain on the UK budget presentation, at around 12:30 GMT.
Apart from this, a softer tone surrounding the US dollar provided an additional boost to the GBP/USD pair and remained supportive of the uptick. However, a combination of factors could help limit any meaningful slide for the USD and keep a lid on any runaway rally for the GBP/USD pair. This, in turn, warrants some caution for aggressive bullish traders and before positioning for any further near-term appreciating move.
Investors remain optimistic about a relatively faster US economic recovery from the pandemic amid the progress in COVID-19 vaccinations and a massive US fiscal spending plan. The reflation trade has been fueling expectations for an uptick in inflation and doubts that the Fed would retain low rates for a longer period. This, along with a fresh leg up in the US Treasury bond yields, should continue to underpin the greenback.
Hence, it remains to be seen if the GBP/USD pair is able to capitalize on the move or meets with some fresh supply at higher levels. Rejection at higher levels will set the stage for an extension of the recent sharp pullback from the vicinity of mid-1.4200s, or near three-year tops set February 24.
Traders on Wednesday will further take cues from the US economic docket, highlighting the release of the ADP report on private-sector employment and ISM Services PMI. Apart from this, the US bond yields might influence the USD price dynamics and further assist traders to grab some short-term opportunities around the GBP/USD pair.
Technical levels to watch
|Today last price||1.3998|
|Today Daily Change||0.0032|
|Today Daily Change %||0.23|
|Today daily open||1.3966|
|Previous Daily High||1.3977|
|Previous Daily Low||1.3859|
|Previous Weekly High||1.4243|
|Previous Weekly Low||1.389|
|Previous Monthly High||1.4243|
|Previous Monthly Low||1.3566|
|Daily Fibonacci 38.2%||1.3932|
|Daily Fibonacci 61.8%||1.3904|
|Daily Pivot Point S1||1.3891|
|Daily Pivot Point S2||1.3816|
|Daily Pivot Point S3||1.3773|
|Daily Pivot Point R1||1.4009|
|Daily Pivot Point R2||1.4052|
|Daily Pivot Point R3||1.4127|
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.