GBP/USD rallies above 1.2200 on soft US Dollar, BoE’s comments

The GBP/USD pierces the 200-day EMA and distance from it, rallying above the 1.2200 figure.
Investors are eyeing the United States inflation report on Thursday.
GBP/USD Price Analysis: A daily close above 1.2200 to pave the way toward 1.2300.

Christian Borjon Valencia FXStreet

The Pound Sterling (GBP) advances against the US Dollar (USD) early in the North American session due to an upbeat market mood on speculations that the US Federal Reserve (Fed) would slowdown rate hikes in a week that an inflation report in the United States is the spotlight. At the time of writing, the GBP/USD is trading at 1.2205.

UK politics and hawkish BoE commentary lift the GBP/USD

Wall Street opens with solid gains. An absent US economic docket on Monday keeps traders adrift to UK news. As reported by Reuters, UK Prime Minister Rishi Sunak said that inflation is not guaranteed to decline in 2022 and that the government would need to be disciplined to curb inflation. Regarding strikes and other themes, UK’s PM Sunak added that he was willing to discuss pay increases for nurses in an effort to finish strikes.

In the meantime, Bank of England (BoE) policymakers led by Catherine Mann said that energy price caps could bring inflation up in other sectors as it could boost consumer spending. She added that what would happen to inflation is unclear when lids are removed.

At the time of typing, the BoE Chief Economist Huw Pill said that the BoE would continue to act to reach the inflation target, saying that the Monetary Policy Committee (MPC) “will respond forcefully” if needed. Pill stated that domestic prices and wages are key to the MPC outlook.

GBP/USD Price Analysis: Technical outlook

After breaching the 200-day Exponential Moving Average (EMA), the GBP/USD closes toward the 1.2200 mark, printing a three-week new high. The twelve-day consolidation period appears to end, and if the GBP/USD clears the 1.2200 figure, that could pave the way for December’s 19 daily high of 1.2242, which, once cleared, could open the door for a rally to 1.2300.

Oscillators like the Relative Strength Index (RSI) show buyers gathering momentum, while the Rate of Change (RoC) woke up and aimed higher after showing lower levels of volatility.

GBP/USD

Overview
Today last price	1.2206
Today Daily Change	0.0111
Today Daily Change %	0.92
Today daily open	1.2095

Trends
Daily SMA20	1.2111
Daily SMA50	1.1957
Daily SMA100	1.1669
Daily SMA200	1.2019

Levels
Previous Daily High	1.21
Previous Daily Low	1.1841
Previous Weekly High	1.2102
Previous Weekly Low	1.1841
Previous Monthly High	1.2447
Previous Monthly Low	1.1992
Daily Fibonacci 38.2%	1.2001
Daily Fibonacci 61.8%	1.194
Daily Pivot Point S1	1.1925
Daily Pivot Point S2	1.1754
Daily Pivot Point S3	1.1667
Daily Pivot Point R1	1.2183
Daily Pivot Point R2	1.227
Daily Pivot Point R3	1.2441

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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