GBP/USD manages to hold above 1.2200, bulls remain on the sidelines amid geopolitical tensions

GBP/USD reverses an Asian session dip to sub-1.2200 levels, albeit lacks any follow-through buying.
Escalating geopolitical tension in the Middle East and hawkish Fed expectations underpin the USD.
Expectations that the BoE is done hiking rates hold back the GBP bulls from placing aggressive bets.

Haresh Menghani FXStreet

The GBP/USD pair attracts some dip-buying following a modest bearish gap opening to sub-1.2200 levels on the first day of a new week and moves back closer to a one-week high touched on Friday. Spot prices currently trade around the 1.2220-1.2225 area and remain at the mercy of the US Dollar (USD) price dynamics.

The safe-haven buck did get a minor lift in the wake of the global flight to safety, fueled by escalating geopolitical tensions in the Middle East. The Hamas militant group in Gaza, Palestine, attacked Israeli towns in an unprecedented move on Saturday. In response, Israel launched airstrikes on Gaza and declared war against the Palestinian enclave of Gaza on Sunday, resulting in hundreds of casualties on both sides. That said, the uncertainty over the Federal Reserve's (Fed) future rate-hike path holds back the USD bulls from placing aggressive bets and lends some support to the GBP/USD pair.

The closely watched US monthly jobs data (NFP) released on Friday showed that the economy added 336K jobs in September, higher than market estimates and the previous month's upwardly revised reading of 227K. The data reaffirms bets for at least one more Fed rate hike move by the year-end, which remains supportive of elevated US Treasury bond yields and underpins the USD. Additional details of the report, however, revealed that wage growth remained moderate during the reported month and eased inflationary concerns. This, in turn, might allow the Fed to soften its hawkish stance.

Hence, investors keep a close eye on this week's release of the FOMC meeting minutes on Wednesday, which will be followed by the latest US consumer inflation figures on Thursday. This will help investors determine the Fed's next policy move, which, in turn, will determine the USD trajectory and provide a fresh impetus to the GBP/USD pair. In the meantime, expectations that the Bank of England (BoE) will again leave interest rates unchanged at its next meeting in November might continue to undermine the British Pound (GBP) and keep a lid on any meaningful upside for spot prices.

Technical levels to watch

GBP/USD

Overview
Today last price	1.2223
Today Daily Change	-0.0014
Today Daily Change %	-0.11
Today daily open	1.2237

Trends
Daily SMA20	1.2279
Daily SMA50	1.2517
Daily SMA100	1.2607
Daily SMA200	1.2439

Levels
Previous Daily High	1.2262
Previous Daily Low	1.2106
Previous Weekly High	1.2262
Previous Weekly Low	1.2037
Previous Monthly High	1.2713
Previous Monthly Low	1.2111
Daily Fibonacci 38.2%	1.2202
Daily Fibonacci 61.8%	1.2165
Daily Pivot Point S1	1.2141
Daily Pivot Point S2	1.2046
Daily Pivot Point S3	1.1986
Daily Pivot Point R1	1.2297
Daily Pivot Point R2	1.2357
Daily Pivot Point R3	1.2453

Author

Haresh Menghani

FXStreet

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

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