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GBP/USD climbs towards 1.2390, bouncing from lows hit at the 1.2330 area

  • GBP/USD is almost flat due to the US Dollar erasing its earlier gains and on a risk-on impulse.
  • Data in the US showed that the housing market remains dampened, a headwind for the US Dollar.
  • Fed’s Waller: Supports 25 bps rate hikes, though does not expect rate cuts by year-end.

GBP/USD seesaws during the North American session, around the 1.2360-1.2390 region, around the London Fix, unable to gain a clear direction. Risk appetite increased, which usually favors the Pound Sterling (GBP), but soft UK economic data weighed on the GBP/USD. At the time of writing, the GBP/USD exchanges hands at 1.2391.

GBP/USD fluctuates between gains/losses as the US Dollar retraces

Sentiment remains upbeat. The US Dollar (USD) retraced from earlier highs, as shown by the US Dollar Index, at 102.552, clings to minuscule gains of 0.05% at around 102.103. Therefore, the GBP/USD climbed from daily lows of around 1.2330s, aiming to cut its earlier losses.

Data-wise, the US economic calendar revealed that Existing Home Sales dropped 1.5% and reached their lowest level since 2010, a report of the National Association of Realtors showed. The Federal Reserve’s (Fed) tightening cycle pushed the housing market into recession. But lately, some Fed officials revealed its intentions to slow the pace of rate hikes, emphasizing the need to hold rates higher for longer.

Philadelphia Fed President Patrick Harker supports the idea of hiking rates at a slower pace and said, “Hikes of 25 basis points will be appropriate going forward.” Harker expects the US economy to grow by 1% and the unemployment rate to jump to 4.5% from 3.5%. Later, KansasCiti Fed President Esther George said that the Federal Reserve must be “patient” to see if inflation in the services sector is waning.

Of late, Fed Board member Christopher Waller said that the market’s perception of terminal rate is not far from where the Federal Funds rate (FFR) stands and adds that the US Central Bank would need to keep rates high, “not cut rates by year-end.”

Meanwhile, Uk Retail Sales for November fell sharply and sent the GBP/USD tumbling down. Figures showed that sales plunged 1% MoM, signaling that inflation and the Bank of England’s (BoE) rate hikes are hitting Britons. Another report stated that UK’s consumer confidence dropped for the first time in three months, returning to historic lows.

What to watch?

Next week’s economic calendar in the UK will feature the Flash Manufacturing and Services PMIs, and the Producer Price Index (PPI). On the US front, Flash Manufacturing and Services PMIs,  the Advanced Gross Domestic Product (GDP) for Q4, Durable Good Orders, and the Fed’s preferred gauge for inflation, the Core PCE.

GBP/USD Key Technical Levels

GBP/USD

Overview
Today last price1.2388
Today Daily Change0.0001
Today Daily Change %0.01
Today daily open1.2387
 
Trends
Daily SMA201.2125
Daily SMA501.2099
Daily SMA1001.1715
Daily SMA2001.1982
 
Levels
Previous Daily High1.2397
Previous Daily Low1.2313
Previous Weekly High1.2249
Previous Weekly Low1.2086
Previous Monthly High1.2447
Previous Monthly Low1.1992
Daily Fibonacci 38.2%1.2365
Daily Fibonacci 61.8%1.2345
Daily Pivot Point S11.2334
Daily Pivot Point S21.2281
Daily Pivot Point S31.225
Daily Pivot Point R11.2419
Daily Pivot Point R21.245
Daily Pivot Point R31.2503

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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