GBP/USD recovers further from multi-week lows, eyeing 1.3700 mark


  • GBP/USD gained some positive traction on Tuesday and recovered a part of the overnight losses.
  • The risk-on impulse in the markets weighed on the safe-haven USD and provided a modest lift.
  • Hawkish Fed expectations, rising US bond yields might continue to act as a tailwind for the USD.

The GBP/USD pair edged higher through the early European session and climbed to fresh daily tops, around the 1.3680 region in the last hour.

The pair attracted some buying during the first half of the trading action on Tuesday and recovered a part of the overnight slump to four-week lows. The uptick allowed the GBP/USD pair to snap three consecutive days of the losing streak and was exclusively sponsored by a modest US dollar weakness.

The risk-on impulse – as depicted by a solid rebound in the equity markets – was seen as a key factor that undermined the safe-haven demand. However, fears of a potential China Evergrande default might keep a lid on the market optimism amid expectations for an imminent Fed taper announcement.

Investors now seem convinced that the Fed would begin rolling back its massive pandemic-era stimulus sooner rather than later. This, along with a goodish pickup in the US Treasury bond yields, should act as a tailwind for the USD and cap gains for the GBP/USD pair, warranting caution for bulls.

There isn't any major market-moving economic data due for release from the UK, leaving the GBP/USD pair at the mercy of the USD price dynamics. This further makes it prudent to wait for some follow-through buying beyond the 1.3700 mark before positioning for any further gains.

Later during the early North American session, the US housing market data might also do little to provide any meaningful impetus to the GBP/USD pair. The market focus remains glued to the outcome of a two-day FOMC monetary policy meeting for clues about the Fed's tapering plan.

Apart from this, investors will further take cues from the latest policy update by the Bank of England, scheduled on Thursday. The key central bank events should help determine the next leg of a directional move for the GBP/USD pair.

Technical levels to watch

GBP/USD

Overview
Today last price 1.3681
Today Daily Change 0.0025
Today Daily Change % 0.18
Today daily open 1.3656
 
Trends
Daily SMA20 1.3785
Daily SMA50 1.38
Daily SMA100 1.391
Daily SMA200 1.3839
 
Levels
Previous Daily High 1.3752
Previous Daily Low 1.3641
Previous Weekly High 1.3913
Previous Weekly Low 1.3728
Previous Monthly High 1.3958
Previous Monthly Low 1.3602
Daily Fibonacci 38.2% 1.3683
Daily Fibonacci 61.8% 1.371
Daily Pivot Point S1 1.3614
Daily Pivot Point S2 1.3572
Daily Pivot Point S3 1.3503
Daily Pivot Point R1 1.3725
Daily Pivot Point R2 1.3794
Daily Pivot Point R3 1.3836

 

 

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