• GBP/USD closes the week above 1.3600 frem 1.3405 lows in late September.
  • BoE tightening expectations have fuelled the pound's recovery.
  • GBP/USD seen at 1.41 in 2022 – Westpac.

The British pound has found support at 1.3610 after having hit resistance at one-week highs of 1.3660 earlier today. The pair consolidates above 1.3600 after a significant recovery from year-to-date lows near 1.3400 last week.

Pound appreciates on BoE hike expectations

The sterling appreciated across the board this week, as market expectations of a BoE hike next year have offset investors’ concerns about the fuel shortages and supply disruptions that pushed the GBP top mid-term lows last week.

Market sources are anticipating the possibility of the Bank of England leading the rest of the world’s major central banks to start raising interest rates in order to tackle inflation pressures. In that case, the market is pricing the first interest rate hike next February.

Furthermore, the widely awaited US Non-Farm Payrolls report has disappointed, showing a 194,000 increase in employment, well below market expectations of 500,000 new jobs. The dollar retreated immediately after the release, to pare losses shortly afterward, as the market assumed that these figures would not change Fed’s plans to start tapering bond purchases over the next months.

GBP/USD seen appreciating to 1.4100 in 2022 – Westpac

According to the FX Analysis Team at Westpac a more hawkish stance by the BoE is likely to support a long-term upside cycle, sending the pair towards 1.4100: “Its fuel shortage notwithstanding, the UK is expected to experience a robust recovery in GDP back to near the potential GDP level that would have been seen had the pandemic not occurred as well as sustained inflation at or above target over the entire forecast period. As a result, the BoE is expected to tighten, in line or just ahead of the FOMC (…) We look for GBP/USD to rise to 1.41 in the second half of 2022, and to only edge back to 1.39 at end-2023.” 

Technical levels to watch

GBP/USD

Overview
Today last price 1.3624
Today Daily Change 0.0004
Today Daily Change % 0.03
Today daily open 1.362
 
Trends
Daily SMA20 1.3667
Daily SMA50 1.3749
Daily SMA100 1.3851
Daily SMA200 1.3845
 
Levels
Previous Daily High 1.3638
Previous Daily Low 1.3571
Previous Weekly High 1.3729
Previous Weekly Low 1.3412
Previous Monthly High 1.3913
Previous Monthly Low 1.3412
Daily Fibonacci 38.2% 1.3612
Daily Fibonacci 61.8% 1.3596
Daily Pivot Point S1 1.3581
Daily Pivot Point S2 1.3542
Daily Pivot Point S3 1.3514
Daily Pivot Point R1 1.3648
Daily Pivot Point R2 1.3677
Daily Pivot Point R3 1.3716

 

 

 

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