GBP/USD Price Analysis: Eyes 1.2700 as Fed-BoE policy divergence sets to squeeze

GBP/USD is looking to reclaim 1.2700 as the Fed-BoE policy divergence looks set to squeeze after Fed’s neutral policy.
Fed Powell has confirmed that two more interest rate hikes are appropriate this year.
GBP/USD is gathering strength for printing a fresh annual high after climbing above the round-level resistance of 1.2700.

Sagar Dua FXStreet

The GBP/USD pair has witnessed a halt after a recovery extension to near 1.2670 in the European session. The Cable is expected to resume its upside journey as the policy divergence between the Federal Reserve (Fed) and the Bank of England (BoE) is set to squeeze.

Due to the significant softening of inflation, the United States managed to skip one more interest rate hike by the Fed. However, the BoE will continue hiking interest rates as inflation in the United Kingdom is significantly higher in comparison with other developed economies.

Meanwhile, Fed chair Jerome Powell has confirmed that two more interest rate hikes are appropriate this year while borrowing rates from the BoE are expected to remain in unchartered territory for now.

GBP/USD is gathering strength for printing a fresh annual high after climbing above the round-level resistance of 1.2700. Advancing 20-period Exponential Moving Average (EMA) at 1.2518 is providing support to the Pound Sterling bulls.

The Relative Strength Index (RSI) (14) has climbed above 60.00, showing no signs of divergence and any kind of overbought situation. This indicates an activation of the bullish momentum.

For further upside, an acceptance above the round-level resistance of 1.2700 will drive the Cable asset toward 26 April 2022 high at 1.2773 and the critical resistance of 1.2800.

On the flip side, a break below May 31 low at 1.2348 would drag the asset toward May 25 low at 1.2308. Slippage below the latter would expose the asset to April 03 low at 1.2275.

GBP/USD daily chart

GBP/USD

Overview
Today last price	1.2666
Today Daily Change	0.0000
Today Daily Change %	0.00
Today daily open	1.2666

Trends
Daily SMA20	1.2457
Daily SMA50	1.2477
Daily SMA100	1.2316
Daily SMA200	1.2032

Levels
Previous Daily High	1.2699
Previous Daily Low	1.2601
Previous Weekly High	1.259
Previous Weekly Low	1.2369
Previous Monthly High	1.268
Previous Monthly Low	1.2308
Daily Fibonacci 38.2%	1.2662
Daily Fibonacci 61.8%	1.2638
Daily Pivot Point S1	1.2612
Daily Pivot Point S2	1.2558
Daily Pivot Point S3	1.2514
Daily Pivot Point R1	1.271
Daily Pivot Point R2	1.2753
Daily Pivot Point R3	1.2808

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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