GBP/USD rallies to fresh weekly high, eyes mid-1.2100s amid notable USD supply

GBP/USD gains traction for the third straight day and climbs to a fresh weekly high.
A combination of factors undermines the USD and remains supportive of the move.
Technical buying above the 1.2100 mark also contributes to the strong intraday rally.

Haresh Menghani FXStreet

The GBP/USD pair builds in this week's bounce from the vicinity of mid-1.1900s, representing the very important 200-day SMA and gains traction for the third successive day on Thursday. The buying interest picks up pace during the first half of the European session and lifts spot prices to a fresh weekly high, around the 1.2135 region in the last hour.

The US Dollar struggles to capitalize on its post-NFP rally and retreats sharply from a one-month top, which, in turn, pushes the GBP/USD pair higher. The uncertainty over the Fed's rate-hike path exerts some downward pressure on the US Treasury bond yields. This, along with a goodish recovery in the global risk sentiment, is seen undermining the safe-haven buck.

Apart from this, possibilities of some short-term trading stops being triggered above the 1.2100 mark seem to contribute to the GBP/USD pair's intraday positive move. That said, the prospects for further policy tightening by the Fed should help limit the downside for the greenback and keep a lid on any meaningful upside for the GBP/USD pair, at least for the time being.

It is worth recalling that Fed Chair Jerome Powell acknowledged on Tuesday that rates might need to move higher than expected if the economy remains strong. A slew of FOMC members echoed Powell's hawkish view that additional rate hikes were likely warranted to fully gain control of inflation. This, along with looming recession fears, should lend support to the safe-haven USD.

Apart from this, expectations that the Bank of England (BoE) is nearing the end of the current rate-hiking cycle might contribute to capping the GBP/USD pair. In fact, the UK central bank removed the phrase that they would "respond forcefully, as necessary". This suggests that the BoE was becoming increasingly unsure as to whether further policy tightening is warranted.

Hence, it remains to be seen if the GBP/USD pair is able to capitalize on the momentum or meets with a fresh supply at higher levels. Market participants now look to the release of the US Initial Weekly Jobless Claims data for some impetus. This, along with the broader risk sentiment, might influence the USD price dynamics and allow traders to grab short-term opportunities.

Technical levels to watch

GBP/USD

Overview
Today last price	1.2132
Today Daily Change	0.0064
Today Daily Change %	0.53
Today daily open	1.2068

Trends
Daily SMA20	1.2271
Daily SMA50	1.2193
Daily SMA100	1.1824
Daily SMA200	1.1948

Levels
Previous Daily High	1.211
Previous Daily Low	1.2036
Previous Weekly High	1.2418
Previous Weekly Low	1.205
Previous Monthly High	1.2448
Previous Monthly Low	1.1841
Daily Fibonacci 38.2%	1.2082
Daily Fibonacci 61.8%	1.2064
Daily Pivot Point S1	1.2033
Daily Pivot Point S2	1.1998
Daily Pivot Point S3	1.1959
Daily Pivot Point R1	1.2107
Daily Pivot Point R2	1.2145
Daily Pivot Point R3	1.218

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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