GBP/USD clings to modest intraday gains above mid-1.2100s, lacks bullish conviction

GBP/USD attracts some buying on Monday and draws support from a modest USD downtick.
The uncertainty over the Fed’s rate-hike path and a positive risk tone undermine the greenback.
Elevated US bond yields limit the USD losses; Bets that the BoE is done raising rates cap the pair.

Haresh Menghani FXStreet

The GBP/USD pair catches fresh bids on the first day of a new week and sticks to its intraday gains through the early part of the European session. Spot prices currently trade around the 1.2175-1.2180 region, up 0.30% for the day, and for now, seem to have snapped a two-day losing streak to a one-week low touched on Friday.

The US Dollar (USD) kicks off the new week on a softer note in the wake of the uncertainty over the Federal Reserve's (Fed) future rate-hike path and turns out to be a key factor acting as a tailwind for the GBP/USD pair. The recent dovish remarks by several Fed officials suggested that the US central bank will leave interest rates unchanged for the second successive time in November. This, along with a generally positive tone around the equity markets, is seen undermining the safe-haven Greenback.

The latest US consumer inflation figures released last week, however, revived market bets for one more Fed rate hike move by the end of this year. This remains supportive of elevated US Treasury bond yields. Apart from this, the risk that the Israel-Hamas clashes could lead to a wide Middle East conflict helps limit the downside for the USD. Furthermore, expectations that the Bank of England (BoE) will maintain the status quo in November hold back bulls from placing fresh bets around the GBP/USD pair.

The BoE surprisingly paused its rate-hiking cycle in September and provided little hints of its intention to raise rates. This makes it prudent to wait for strong follow-through buying before confirming that the pair's recent corrective pullback from the vicinity of mid-1.2300s, or the monthly peak touched last Wednesday, has run its course. There isn't any relevant UK macro data due on Monday, while the US economic docket features the only release of the Empire State Manufacturing Index.

Investors will also look upon speeches by influential FOMC members for cues about the US central bank's next policy move. This, along with the US bond yields and the broader risk sentiment, will drive the USD demand and provide some impetus to the GBP/USD pair later during the North American session. The focus will then shift to the monthly UK employment details, due on Tuesday, which might infuse some volatility around the GBP cross and provide some impetus to the major.

Technical levels to watch

GBP/USD

Overview
Today last price	1.2162
Today Daily Change	0.0020
Today Daily Change %	0.16
Today daily open	1.2142

Trends
Daily SMA20	1.2222
Daily SMA50	1.2464
Daily SMA100	1.26
Daily SMA200	1.2444

Levels
Previous Daily High	1.2226
Previous Daily Low	1.2123
Previous Weekly High	1.2337
Previous Weekly Low	1.2123
Previous Monthly High	1.2713
Previous Monthly Low	1.2111
Daily Fibonacci 38.2%	1.2162
Daily Fibonacci 61.8%	1.2186
Daily Pivot Point S1	1.2102
Daily Pivot Point S2	1.2061
Daily Pivot Point S3	1.1999
Daily Pivot Point R1	1.2204
Daily Pivot Point R2	1.2266
Daily Pivot Point R3	1.2307

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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