GBP/USD climbs to fresh daily high, further beyond 1.2200 amid sustained USD selling

GBP/USD regains positive traction on Monday amid the prevalent USD selling bias.
Diminishing odds for more aggressive Fed rate hikes continue to weigh on the USD.
A softer risk tone, rebounding US bond yields to limit the USD losses and cap the pair.

Haresh Menghani FXStreet

The GBP/USD pair jumps back above the 1.2200 mark during the early part of the European session, attracting fresh buying on the first day of a new week. Spot prices, however, still remain well below a one-month high at around the 1.2245 touched on Friday.

The US dollar languishes near its lowest level since July 5, which is turning out to be a key factor lending support to the GBP/USD pair. Market participants continue to scale back their expectations for more aggressive rate hikes by the Federal Reserve amid worries about an economic downturn. This, to a larger extent, overshadows Friday's stronger US Personal Consumption Expenditures (PCE) and continues to weigh on the greenback.

The British pound in contrast is underpinned by rising bets for a 50 bps rate hike by the Bank of England – though, that said, a combination of factors could cap gains for the GBP/USD pair. The recent optimistic move in the equity markets has run out of steam amid growing recession fears. This, along with a modest bounce in the US Treasury bond yields, should help limit the downside for the USD and act as a headwind for the major, at least for now.

Investors might also refrain from placing aggressive bets and prefer to wait on the sidelines ahead of confirmation from the Bank of England policy meeting on Thursday. Apart from this, important US macro data scheduled at the beginning of a new month would determine the next leg of a directional move for the GBP/USD pair. A rather busy week kicks off with the release of the ISM Manufacturing PMI, which could provide some trading impetus to the major.

Technical levels to watch

GBP/USD

Overview
Today last price	1.2205
Today Daily Change	0.0026
Today Daily Change %	0.21
Today daily open	1.2179

Trends
Daily SMA20	1.1994
Daily SMA50	1.2223
Daily SMA100	1.2525
Daily SMA200	1.2989

Levels
Previous Daily High	1.2246
Previous Daily Low	1.2063
Previous Weekly High	1.2246
Previous Weekly Low	1.196
Previous Monthly High	1.2246
Previous Monthly Low	1.176
Daily Fibonacci 38.2%	1.2176
Daily Fibonacci 61.8%	1.2133
Daily Pivot Point S1	1.2079
Daily Pivot Point S2	1.198
Daily Pivot Point S3	1.1896
Daily Pivot Point R1	1.2262
Daily Pivot Point R2	1.2346
Daily Pivot Point R3	1.2445

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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