- GBP/USD scales higher for the second straight day, albeit lacks follow-through buying.
- The risk-off mood drives some haven flows towards the USD and caps gains for the pair.
- The technical setup supports prospects for an eventual break below the 200-day SMA.
The GBP/USD pair builds on the overnight bounce from the 1.1960 area, or over a one-month low and gains some positive traction for the second successive day on Wednesday. Spot prices, however, struggle to capitalize on the move or find acceptance above the 1.2100 mark and retreat around 35 pips from the daily top. The pair is currently placed around the 1.2075 region, still up over 0.30% for the day.
The prevalent risk-off environment - as depicted by a generally weaker tone around the equity markets - assists the safe-haven US Dollar to recover a major part of its intraday losses. This, in turn, is seen as a key factor acting as a headwind for the GBP/USD pair. That said, the prospects for an imminent pause in the Fed's rate-hiking cycle hold back the USD bulls from placing aggressive bets and remain supportive of the bid tone surrounding the major.
Looking at the broader picture, the recent repeated failures near the 1.2450 supply zone constitute the formation of a bearish multiple-top pattern on the daily chart. That said, the emergence of some buying near a technically significant 200-day SMA warrants some caution for bearish traders. This makes it prudent to wait for strong follow-through selling below the overnight swing low, around the 1.1960 zone before positioning for a further depreciating move.
With oscillators on the daily chart holding in the negative territory, the GBP/USD pair might then turn vulnerable to accelerate the fall towards the 1.1900 round figure. The downward trajectory could get extended further towards testing the YTD low, around the 1.1840 region touched on January 6, en route to the 100-day SMA, currently near the 1.1815-1.1810 area.
On the flip side, any meaningful rally beyond the 1.2100 mark is likely to confront stiff resistance ahead of the 1.2200 round figure. The latter coincides with the 100-day SMA, which if cleared might negate the bearish outlook and prompt some short-covering. The GBP/USD pair could then climb to the 1.2235-1.2280 barrier before aiming to reclaim the 1.2300 mark.
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 clings to gains near 1.0700, awaits key US data
EUR/USD clings to gains near the 1.0700 level in early Europe on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold price lacks firm intraday direction, holds steady above $2,300 ahead of US data
Gold price remains confined in a narrow band for the second straight day on Thursday. Reduced Fed rate cut bets and a positive risk tone cap the upside for the commodity. Traders now await key US macro data before positioning for the near-term trajectory.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price. Coupled with broader market gloom, INJ token’s doomed days may not be over yet.
Meta takes a guidance slide amidst the battle between yields and earnings
Meta's disappointing outlook cast doubt on whether the market's enthusiasm for artificial intelligence. Investors now brace for significant macroeconomic challenges ahead, particularly with the release of first-quarter gross domestic product (GDP) data on Thursday.