GBP/USD: Bulls take a breather, 1.2930 still on sight?

The GBP/USD pair maintains its recovery-mode from nine-day lows in the Asian trades, as the dust settles over the Yellen’s testimony aftermath.

GBP/USD: Bulls back in control

Stronger UK employment data-led rebound in the GBP/USD pair gained further traction, as the US dollar got broadly sold-off into Yellen’s testimony, after the Fed Chair sounded less hawkish than markets’ expected, advocating gradual rate hikes in the coming months.

Meanwhile, the pound also found fresh boost from hawkish comments from the BOE MPC member McCafferty, who said overnight that he seeks rate hikes in August and unwinding of QE.

As a result of the central bankers’ speeches from both the UK and US, the monetary policy divergence is seen narrowing, boosting the GBP at the expense of the US dollar. Meanwhile, the USD index drops -0.18% to 95.38, as the 2-year Treasury yields continue to trade sub 1.5%.

Markets now await fresh incentives from the upcoming US PPI and jobless claims data to provide some respite to the USD bulls, ahead of the Round 2 of Yellen’s testimony on the Semiannual Monetary Policy Report before the Senate Banking Committee. Also, speeches from the FOMC members Evans and Brainard will be closely eyed.

GBP/USD levels to consider             

Valeria Bednarik, Chief Analyst at FXStreet noted, “In the 4 hours chart, the price has settled above  a flat 20 SMA, while technical indicators are now stuck around their mid-lines, with no clear directional strength, limiting chances of a steeper recovery, as long as the price remains below 1.2925, the next Fibonacci resistance and  this week's high. Support levels: 1.2860 1.2810 1.2770 Resistance levels: 1.2895 1.2925 1.2960.”