- GBP/USD regained strong positive traction on Tuesday amid a broad-based USD weakness.
- The recent hawkish BoE signals underpinned the British pound and remained supportive.
- A sustained move beyond 100-day SMA will set the stage for a further appreciating move.
The USD remained heavily offered through the first half of the European session and pushed the GBP/USD pair to one-month tops, closer to the 1.3800 mark in the last hour.
Following the previous day's modest downtick, the GBP/USD pair caught some fresh bids on Tuesday and built on its recent strong rebound from the vicinity of the 1.3400 mark touched in late September. This marked the fourth day of a positive move in the previous five and was sponsored by aggressive selling around the US dollar.
The greenback was weighed down by the overnight pullback in the US Treasury bond yields and dismal US Industrial Production data, which fell by the most in seven months. Apart from this, the dominant risk-on flow dragged the safe-haven USD to three-week lows and was seen as a key factor that provided a strong lift to the GBP/USD pair.
Meanwhile, the ongoing USD corrective decline suggests that the markets have fully priced in the prospects for an early policy tightening by the Fed. It is worth recalling that the FOMC meeting released last Wednesday reaffirmed that the Fed remains on track to begin rolling back its massive pandemic-era stimulus by the end of 2021.
On the other hand, the British pound was underpinned by the recent hawkish remarks from the Bank of England officials, signalling that an imminent interest rate hike later this year. In fact, the BoE Governor Andrew Bailey said that the British central bank will have to act amid increasing risks to medium-term inflation expectations.
With the latest leg up, the GBP/USD pair has now moved back closer to 100-day SMA pivotal resistance, currently around the 1.3805 region. A sustained move beyond will be seen as a fresh trigger for bullish traders and set the stage for additional gains amid absent relevant market-moving economic releases, either from the UK or the US.
That said, traders might take cues from scheduled speeches from the BoE Governor Andrew Bailey and BoE chief economist Catherine Mann for some impetus. Apart from this, comments by Fed Governor Michelle Bowman could influence the USD price dynamics and produce some short-term trading opportunities around the GBP/USD pair.
Technical levels to watch
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.
Recommended content
Editors’ Picks
EUR/USD holds gains near 1.0650 amid risk reset
EUR/USD is holding onto its recovery mode near 1.0650 in European trading on Friday. A recovery in risk sentiment is helping the pair, as the safe-haven US Dollar pares gains. Earlier today, reports of an Israeli strike inside Iran spooked markets.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD is rebounding toward 1.2450 in early Europe on Friday, having tested 1.2400 after the UK Retail Sales volumes stagnated again in March, The pair recovers in tandem with risk sentiment, as traders take account of the likely Israel's missile strikes on Iran.
Gold price defends gains below $2,400 as geopolitical risks linger
Gold price is trading below $2,400 in European trading on Friday, holding its retreat from a fresh five-day high of $2,418. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row, supported by lingering Middle East geopolitical risks.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.