GBP/USD climbs to multi-day top, around 1.3365-70 region


  • The heavily offered tone surrounding the USD pushed GBP/USD back above mid-1.3300s.
  • A steep fall in the US bond yields turned out to be a key factor that weighed on the USD.
  • Brexit-related uncertainties could act as a headwind for the British pound and cap gains.

The GBP/USD pair caught fresh bids during the early European session and shot to the 1.3365-70 area, or a near one-week high in the last hour.

Following a brief consolidation through the first half of the trading action on Tuesday, the GBP/USD pair regained positive traction and is now looking to build on its recent bounce from a YTD low. The uptick was exclusively sponsored by the heavily offered tone surrounding the US dollar, weighed down by a steep decline in the US Treasury bond yields.

The detection of a new and possibly vaccine-resistant coronavirus variant – Omicron – seemed to have dashed market expectations for an early policy tightening by the Fed. This, along with the global flight to safety, dragged the yield in the benchmark 10-year US government bond to a three-week low, around the 1.45% threshold, and undermined the greenback.

Meanwhile, worries about the potential economic fallout from the spread of the new coronavirus variant took its toll on the global risk sentiment. This was evident from a selloff in the equity markets, though did little to provide any respite to the safe-haven USD. That said, persistent Brexit-related uncertainties might cap gains for the GBP/USD pair.

The UK-EU impasse over the Northern Ireland Protocol, along with the worsening row over the post-Brexit fishing rights between France and Britain could act as a headwind for the British pound. This, in turn, warrants some caution for aggressive bullish traders and before confirming that the GBP/USD pair has formed a near-term bottom near the 1.3280-75 region.

There isn't any major market-moving economic data due for release from the UK, while the US economic docket features Chicago PMI and the Conference Board's Consumer Confidence Index. The key focus, however, will be on Fed Chair Jerome Powell's testimony before the Senate Banking Committee, which could influence the USD and provide some impetus to the GBP/USD pair.

Technical levels to watch

GBP/USD

Overview
Today last price 1.3362
Today Daily Change 0.0059
Today Daily Change % 0.44
Today daily open 1.3303
 
Trends
Daily SMA20 1.3448
Daily SMA50 1.3579
Daily SMA100 1.369
Daily SMA200 1.3817
 
Levels
Previous Daily High 1.3363
Previous Daily Low 1.3288
Previous Weekly High 1.3457
Previous Weekly Low 1.3278
Previous Monthly High 1.3834
Previous Monthly Low 1.3434
Daily Fibonacci 38.2% 1.3317
Daily Fibonacci 61.8% 1.3334
Daily Pivot Point S1 1.3273
Daily Pivot Point S2 1.3242
Daily Pivot Point S3 1.3197
Daily Pivot Point R1 1.3348
Daily Pivot Point R2 1.3393
Daily Pivot Point R3 1.3424

 

 

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