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GBP/USD consolidates in a range below 1.2400 mark, near six-week top set on Friday

  • GBP/USD oscillates in a narrow trading band through the Asian session on Monday.
  • Rebounding US bond yields help the USD to stall the post-NFP slump and cap gains.
  • Bets that the Fed is done hiking rates keeps a lid on the USD and should limit losses.

The GBP/USD pair kicks off the new week on a subdued note and consolidates Friday's strong move up its highest level since September 20. Spot prices currently trade around the 1.2375 region, nearly unchanged for the day, and remain at the mercy of the US Dollar (USD) price dynamics.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, bounces off a six-week trough touched on Friday in the wake of a modest uptick in the US Treasury bond yields and acts as a headwind for the GBP/USD pair. Any meaningful USD recovery, however, seems elusive in the wake of firming expectations that the Federal Reserve (Fed) is likely to hold interest rates steady again at its December meeting.

The bets were reaffirmed by softer-than-expected US macro data released on Friday. In fact, the closely-watched US NFP report showed that the economy added 150K jobs in October as compared to 180K anticipated. Adding to this, the previous month's reading was also revised down to 297K from 336K reported originally. Furthermore, the US ISM Non-Manufacturing PMI fell to a five-month low of 51.8 in October from 53.6 previous.

The aforementioned fundamental backdrop should hold back the USD bulls from placing aggressive bets and continue to lend some support to the GBP/USD pair That said, the Bank of England's (BoE) bleak economic outlook, saying that the economy risks falling into recession next year, might cap gains for the major pair. Moreover, investors seem convinced that the UK central bank's next policy move is more likely to be a rate cut.

In fact, the markets have now fully priced in a 25 bps rate cut by August 2024, which, in turn, warrants some caution before positioning for an extension of last week's strong move up. Market participants now look to the release of the UK Construction PMI for some impetus. Later during the North American session, traders will take cues from Fed Governor Lisa Cook and BoE  Chief Economist Huw Pill's scheduled speeches.

Technical levels to watch

GBP/USD

Overview
Today last price1.2374
Today Daily Change-0.0005
Today Daily Change %-0.04
Today daily open1.2379
 
Trends
Daily SMA201.2191
Daily SMA501.2305
Daily SMA1001.2547
Daily SMA2001.2435
 
Levels
Previous Daily High1.239
Previous Daily Low1.2185
Previous Weekly High1.239
Previous Weekly Low1.209
Previous Monthly High1.2337
Previous Monthly Low1.2037
Daily Fibonacci 38.2%1.2311
Daily Fibonacci 61.8%1.2263
Daily Pivot Point S11.2246
Daily Pivot Point S21.2113
Daily Pivot Point S31.2041
Daily Pivot Point R11.2451
Daily Pivot Point R21.2523
Daily Pivot Point R31.2656

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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