- GBP/USD staged a modest bounce from the 1.3200 neighbourhood, though lacked follow-through.
- Hawkish Fed expectations underpinned the greenback and capped gains amid Brexit uncertainties.
- Bears might wait for a sustained break below the 1.3200 mark before positioning for further losses.
The GBP/USD pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading band, around the 1.3230-35 region through the Asian session.
The pair managed to defend the 1.3200 mark and attracted some buying on the first day of a new week, though the attempted recovery lacked any follow-through amid renewed US dollar strength. As investors' looked past Friday's mixed US NFP report, the USD was back in demand and remained well supported by the prospects for a faster policy tightening by the Fed.
Investors seem convinced that the Fed would be forced to adopt a more aggressive policy response to contain stubbornly high inflation. In fact, the money markets indicate a high probability of the Fed liftoff by May 2022, which, in turn, acted as a tailwind for the greenback. This, along with Brexit-related uncertainties, capped the upside for the GBP/USD pair.
Meanwhile, the global risk sentiment stabilized on the back of preliminary observations from South Africa, suggesting that Omicron patients had relatively mild symptoms. This was evident from a generally positive tone around the equity markets, which might hold back the USD bulls from placing fresh bullish bets and limit the downside for the GBP/USD pair.
Hence, it will be prudent to wait for a sustained break below the 1.3200 mark before positioning for a further near-term depreciating move for the GBP/USD pair. The UK economic docket features the only release of Construction PMI, while there isn't any major market-moving data due from the US. This further warrants some caution for aggressive bearish traders.
That said, a scheduled speech by the Bank of England Deputy Governor Ben Broadbent might influence the British pound and provide some impetus to the GBP/USD pair. This, along with the broader market risk sentiment, will be looked upon for some short-term trading opportunities around the major.
Technical levels to watch
|Today last price||1.3231|
|Today Daily Change||-0.0008|
|Today Daily Change %||-0.06|
|Today daily open||1.3239|
|Previous Daily High||1.3311|
|Previous Daily Low||1.3209|
|Previous Weekly High||1.3371|
|Previous Weekly Low||1.3194|
|Previous Monthly High||1.3698|
|Previous Monthly Low||1.3194|
|Daily Fibonacci 38.2%||1.3248|
|Daily Fibonacci 61.8%||1.3272|
|Daily Pivot Point S1||1.3195|
|Daily Pivot Point S2||1.3151|
|Daily Pivot Point S3||1.3093|
|Daily Pivot Point R1||1.3297|
|Daily Pivot Point R2||1.3355|
|Daily Pivot Point R3||1.3399|
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