GBP/USD drops to 1.2300 mark amid modest USD recovery from multi-month low


Share:
  • GBP/USD drifts into negative territory for the second successive day on Tuesday.
  • The USD attracts haven flows amid looming recession risks and exerts pressure.
  • Expectations that the BoE will continue raising rates should limit deeper losses.

The GBP/USD pair attracts some sellers following an early uptick to the 1.2415 area and turns lower for the second successive day on Tuesday. Spot prices retreat further from the highest level since June 2022 touched on Monday and drop to the 1.2300 round-figure mark, or a four-day low during the first half of the European session.

The US Dollar stages a modest recovery from a nine-month low and turns out to be a key factor exerting some downward pressure on the GBP/USD pair. The market sentiment remains fragile amid worries about the economic headwinds stemming from the worst yet COVID-19 outbreak in China. Furthermore, the protracted Russia-Ukraine war has been fueling recession fears. This, in turn, tempers investors' appetite for riskier assets and drives some haven flows towards traditional safe-haven assets, including the buck.

The British Pound, on the other hand, is pressured by weaker PMI prints, which showed that business activity in both manufacturing and services sectors contracted in January. However, speculations that elevated consumer inflation will maintain pressure on the Bank of England (BoE) to continue raising interest rates could lend some support to the Sterling. Apart from this, rising bets for a smaller 25 bps Fed rate hike in February might cap the USD and help limit deeper losses for the GBP/USD pair.

Hence, it will be prudent to wait for strong follow-through selling before confirming that spot prices have topped out in the near term and positioning for any meaningful corrective decline. Traders now look forward to the US economic docket, featuring the release of the flash PMI prints and the Richmond Manufacturing Index. This, along with the US bond yields and the broader risk sentiment, will influence the USD price dynamics and produce short-term trading opportunities around the GBP/USD pair.

Technical levels to watch

GBP/USD

Overview
Today last price 1.2308
Today Daily Change -0.0065
Today Daily Change % -0.53
Today daily open 1.2373
 
Trends
Daily SMA20 1.2159
Daily SMA50 1.2123
Daily SMA100 1.1732
Daily SMA200 1.1975
 
Levels
Previous Daily High 1.2448
Previous Daily Low 1.2324
Previous Weekly High 1.2436
Previous Weekly Low 1.2169
Previous Monthly High 1.2447
Previous Monthly Low 1.1992
Daily Fibonacci 38.2% 1.2371
Daily Fibonacci 61.8% 1.2401
Daily Pivot Point S1 1.2315
Daily Pivot Point S2 1.2257
Daily Pivot Point S3 1.2191
Daily Pivot Point R1 1.244
Daily Pivot Point R2 1.2506
Daily Pivot Point R3 1.2564

 

 

Share: Feed news

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.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Editors’ Picks

AUD/USD finds buyers near 0.6950 amid subdued US Dollar

AUD/USD finds buyers near 0.6950 amid subdued US Dollar

AUD/USD is defending the 0.6950 support amid a broadly subdued US Dollar so far this Wednesday. US President Joe Biden's annual State of the Union speech fails to yield any relevant market reaction. US data and Fedspeak coming up next. 

AUD/USD News

EUR/USD grinds higher past 1.0700 even as US President Biden’s SOTU sounds tough on China

EUR/USD grinds higher past 1.0700 even as US President Biden’s SOTU sounds tough on China

EUR/USD floats around 1.0725-30 after snapping a four-day downtrend as the pair traders struggle to believe in the hawkish comments from US President Joe Biden’s State of the Union (SOTU) speech.

EUR/USD News

Gold eyes $1,880 as investors digest Powell’s guidance and Biden’s SOTU

Gold eyes $1,880 as investors digest Powell’s guidance and Biden’s SOTU

Gold price (XAU/USD) is aiming to capture the immediate resistance of $1,880.00 in the Asian session. The precious metal rebounded after dropping to near $1870.00 and is expected to add gains ahead as the risk appetite of the market participants is improving.

Gold News

Why Cosmos price is likely to rally toward $17 in February

Why Cosmos price is likely to rally toward $17 in February

Cosmos price continues to display strength as the uptrend seems unfazed by investors who may be taking profit off January's 70% gain. Considering the overall bullish stance in the crypto market, a 15% rally from today’s market value is a conservative estimate.

Read more

Soft landing, hard landing, no landing?

Soft landing, hard landing, no landing?

The Dollar has started the year on a soft footing on the view that the Fed can respond to a soft US landing, as the Rest of the World recovers. The recent run of data, especially out of the US, questions whether the Fed needs to cut rates at all.

Read more

Forex MAJORS

Cryptocurrencies

Signatures