- GBP/USD gains some positive traction amid a modest USD pullback from the weekly top.
- A combination of factors should limit deeper USD losses and cap the upside for the pair.
- Hawkish Fed expectations and a softer risk tone should act as a tailwind for the Greenback.
The GBP/USD pair shows some resilience below a technically significant 200-day Simple Moving Average (SMA) and attracts some buyers near the 1.2100 mark on Wednesday. The intraday uptick pushes spot prices to a fresh daily high, around the 1.2175-1.2180 region during the mid-European session, though any meaningful positive move seems elusive.
The US Dollar struggles to find acceptance above the very important 200-day SMA and for now, seems to have stalled this week's goodish recovery move from over a five-month low. This, in turn, is seen as a key factor acting as a tailwind for the GBP/USD pair. Meanwhile, the intraday USD pullback from a fresh weekly high lack any obvious fundamental catalyst and is likely to remain limited amid hawkish Fed expectations.
The recent upbeat US macro data suggests that the economy remains resilient despite rising borrowing costs and fuel speculations that the Fed may lift rates more than projected. This acts as a tailwind for the US Treasury bond yields and should lend support to the buck. Apart from this, the cautious mood - amid growing recession fears - supports prospects for the emergence of some buying around the safe-haven USD.
The market sentiment remains fragile amid worries about a deeper global economic downturn. This is evident from a softer tone around the equity markets, which tends to drive some haven flows towards the Greenback. In the absence of any major market-moving economic releases, the fundamental backdrop warrants some caution before placing aggressive bullish bets around the GBP/USD pair and positioning for any further gains. The pair is still technically on the rise, however, with price action showing a clear pattern of higher highs and higher lows since the September 26 YTD low. In addition, the break above the key 1.1742 previous downtrend's last lower high marked a change in the longer-term trend. The overall bias, therefore, from a purely technical perspective, remains with the bulls.
Technical levels to watch
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.
Recommended content
Editors’ Picks
EUR/USD stays weak near 1.0650 ahead of Eurozone PMI data
EUR/USD remains on the back foot near 1.0650 in European trading on Tuesday. Resurgent US Dollar demand amid a cautious risk tone weighs on the pair. Investors stay wary ahead of the preliminary Eurozone and US business PMI data.
GBP/USD eases below 1.2350, UK PMIs eyed
GBP/USD is dropping below 1.2350 in the European session, as the US Dollar sees fresh buying interest on tepid risk sentiment. The further downside in the pair could remain capped, as traders await the UK PMI reports for fresh trading impetus.
Gold could see a rebound before resuming the correction
Gold price sees a fresh leg down in Asia on Tuesday even as risk flows dissipate. Receding fears over Middle East escalation offset subdued US Dollar and Treasury bond yields. Gold remains heavily oversold on the 4H chart, rebound appears in the offing.
PENDLE price soars 10% after Arthur Hayes’ optimism on Pendle derivative exchange
Pendle is among the top performers in the cryptocurrency market today, posting double-digit gains. Its peers in the altcoin space are not as forthcoming even as the market enjoys bullish sentiment inspired by Bitcoin price.
Focus on April PMIs today
In the euro area, focus today will be on the euro area PMIs for April. The previous months' PMIs have shown a return of the two-speed economy with the service sector in expansionary territory and manufacturing sector stuck in contraction.