GBP/USD edges higher amid weaker USD, remains below 100-day barrier near 1.2500


  • GBP/USD catches some bids for the second straight day amid the prevalent USD selling bias.
  • Bets that the Fed will not hike rates again and a positive risk tone undermine the Greenback.
  • Expectations that the BoE will start cutting rates in 2024 amid looming recession to cap gains.

The GBP/USD pair attracts some dip-buying during the Asian session on Monday and touched a three-day to, around the 1.2470 region in the last hour. Spot prices, however, remain below the 100-day Simple Moving Average (SMA) pivotal resistance near the 1.2500 psychological mark and a two-month peak touched last week.

The US Dollar (USD) struggles to register any meaningful recovery and languishes near its lowest level since September 1, which is seen as a key factor acting as a tailwind for the GBP/USD pair. The US CPI and the PPI report released last week indicated that the high-prices nightmare has finally ended. This should allow the Federal Reserve (Fed) to maintain the status quo at its December meeting and continue to weigh on the USD.

Furthermore, the markets have been pricing in the possibility that the Fed will start cutting interest rates in early 2024 and engineer an economic soft landing. This dragged the yield on the benchmark 10-year US government bond to a two-month low level of 4.379% on Friday. Apart from this, a generally positive tone around the Asian equity markets further undermines the safe-haven Greenback and lends support to the GBP/USD pair.

The markets, however, have brought forward the date at which they expect the Bank of England (BoE to begin cutting interest rates from their 15-year peak in the wake of looming recession risks. The bets were reaffirmed by weaker UK Retail Sales figures, which added to a slew of negative readings last week and fitted with the darkening outlook for Britain's economy. This might keep a lid on any further appreciating move for the GBP/USD pair.

Even from a technical perspective, last week's rejection near the 1.2500 mark, or the 100-day SMA barrier, makes it prudent to wait for strong follow-through buying before placing fresh bullish bets. In the absence of any relevant market-moving economic releases, either from the UK or the US, the USD price dynamics will continue to play a key role in influencing the GBP/USD pair and allow traders to grab short-term opportunities.

Technical levels to watch

GBP/USD

Overview
Today last price 1.247
Today Daily Change 0.0009
Today Daily Change % 0.07
Today daily open 1.2461
 
Trends
Daily SMA20 1.2263
Daily SMA50 1.2257
Daily SMA100 1.2509
Daily SMA200 1.2444
 
Levels
Previous Daily High 1.2462
Previous Daily Low 1.2374
Previous Weekly High 1.2506
Previous Weekly Low 1.2213
Previous Monthly High 1.2337
Previous Monthly Low 1.2037
Daily Fibonacci 38.2% 1.2429
Daily Fibonacci 61.8% 1.2408
Daily Pivot Point S1 1.2402
Daily Pivot Point S2 1.2344
Daily Pivot Point S3 1.2314
Daily Pivot Point R1 1.2491
Daily Pivot Point R2 1.2521
Daily Pivot Point R3 1.2579

 

 

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