- GBP/USD oscillates in a narrow trading band through the early European session on Thursday.
- Bets for smaller Fed rate hikes keep the USD bulls on the defensive and lend some support.
- Traders prefer to wait for the release of the Advance Q4 GDP before placing aggressive bets.
The GBP/USD pair plateaus after the previous day's positive move and oscillates in a narrow range through the early European session on Thursday, in a sort of mini bull flag pattern. Spot prices manage to hold above the 1.2400 mark and remain well within the striking distance of the highest level since June 2022 set on January 23. The overall medium-term trend remains bullish with the default expectation that this will continue. A break above the short-term range's highs at 1.2418, would open the way to the January high at 1.2447, and most likely beyond. Much depends on data out of the US, with two key releases - Q4 GDP and Core PCE - coming out of the US to end the week.
The underlying bearish sentiment surrounding the US Dollar turns out to be a key factor that continues to act as a tailwind for the GBP/USD pair. In fact, the USD Index, which tracks the Greenback against a basket of currencies, languishes near an eight-month low amid firming expectations for a less aggressive policy tightening by the Fed. The markets now seem convinced that the US central bank will soften its hawkish stance and have been pricing in a smaller 25 bps rate hike in February. This keeps a lid on the recent move up in the US Treasury bond yields and is seen undermining the Greenback.
The British Pound, on the other hand, draws support from speculations that elevated consumer inflation will maintain pressure on the Bank of England (BoE) to continue raising interest rates. This, in turn, favours the GBP/USD bulls and supports prospects for a further near-term appreciating move. Traders, however, seem reluctant and prefer to move to the sidelines ahead of the Advance US Q4 GDP print, due later during the early North American session. This will be followed by the release of the US Core PCE Price Index on Friday, which will play a key role in influencing the Fed's rate strategy.
The focus will then shift to next week's key central bank event risks - the outcome of a two-day FOMC policy meeting on Wednesday and the BoE decision on Thursday. This will help determine the next leg of a directional move for the GBP/USD pair. In the meantime, the USD price dynamics might provide some impetus in the absence of any relevant market-moving economic releases from the UK. Nevertheless, the fundamental backdrop seems tilted firmly in favour of bullish traders, suggesting that any meaningful pullback is more likely to get bought into and remain limited, at least for the time being.
Technical levels to watch
|Today last price||1.2402|
|Today Daily Change||0.0004|
|Today Daily Change %||0.03|
|Today daily open||1.2398|
|Previous Daily High||1.24|
|Previous Daily Low||1.2283|
|Previous Weekly High||1.2436|
|Previous Weekly Low||1.2169|
|Previous Monthly High||1.2447|
|Previous Monthly Low||1.1992|
|Daily Fibonacci 38.2%||1.2355|
|Daily Fibonacci 61.8%||1.2328|
|Daily Pivot Point S1||1.232|
|Daily Pivot Point S2||1.2243|
|Daily Pivot Point S3||1.2203|
|Daily Pivot Point R1||1.2437|
|Daily Pivot Point R2||1.2477|
|Daily Pivot Point R3||1.2554|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.