- GBP/USD comes under some selling pressure on Tuesday and snaps a three-day winning streak.
- The downside remains limited amid sustained USD selling and ahead of the FOMC/BoE meetings.
- The technical setup still favours bulls and supports prospects for the emergence of dip-buying.
The GBP/USD pair stalls a three-day-old uptrend on Tuesday and retreats from its highest level since early February touched the previous day. The pair maintains its offered tone through the early North American session and is currently placed just below the mid-1.2200s, though lacks follow-through.
The pullback could be attributed to some repositioning trade ahead of this week's key central bank event risks - the crucial FOMC policy decision on Wednesday, followed by the Bank of England (BoE) meeting on Thursday. In the meantime, the prospects for a less hawkish Federal Reserve (Fed), along with a strong follow-through rally in the equity markets, drag the safe-haven US Dollar (USD) to a fresh five-week low and lends support to the GBP/USD pair.
From a technical perspective, the overnight breakout through the 1.2200 mark, or the 61.8% Fibonacci retracement level of the January-March downfall was seen as a fresh trigger for bulls. Moreover, oscillators on the daily chart are holding in positive territory and are still far from being in the overbought zone. This suggests that the path of least resistance for the GBP/USD pair is to the upside and supports prospects for the emergence of some dip-buying at lower levels.
That said, it will still be prudent to wait for some follow-through buying beyond the monthly top, around the 1.2285 region set on Monday, before positioning for any further gains. The GBP/USD pair might then climb to test the next relevant hurdle near the 1.2320 region before eventually aiming to reclaim the 1.2400 round-figure mark. The momentum could get extended further towards the double-top resistance near the 1.2450 region, or the YTD peak touched in January.
On the flip side, 61.8% Fibo. level, around the 1.2200 mark, now seems to protect the immediate downside. Sustained weakness below might prompt some technical selling and drag the GBP/USD pair towards the 1.2125 confluence support. The latter comprises 50% Fibo. level and the 200-day Exponential Moving Average (SMA), which if broken decisively might shift the near-term bias back in favour of bearish traders and pave the way for deeper losses.
GBP/USD daily chart
Key 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 edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD clings to gains just above 1.2500 on US PCE
GBP/USD keeps its uptrend unchanged and navigates the area beyond 1.2500 the figure amidst slight gains in the US Dollar following the release of US inflation tracked by the PCE.
Gold keeps its daily gains near $2,350 following US inflation
Gold prices maintain their constructive bias around $2,350 after US inflation data gauged by the PCE surpassed consensus in March and US yields trade with slight losses following recent peaks.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.