GBP/USD retakes 1.2100 amid a modest USD downtick, further positive move seems unlikely

GBP/USD rebounds swiftly from a multi-day low touched earlier this Monday.
A recovery in the risk sentiment undermines the USD and offers some support.
Hawkish Fed expectations could help limit the USD downside and cap the pair.

Haresh Menghani FXStreet

The GBP/USD pair builds on its goodish intraday bounce from the 1.2030 area, or a multi-day low touched earlier this Monday and scales higher through the mid-European session. Spot prices climb back above the 1.2100 mark in the last hour and reverse a major part of Friday's downfall amid the emergence of some US Dollar selling.

A modest recovery in the global risk sentiment - as depicted by a turnaround in the equity markets - exerts some downward pressure on the safe-haven buck. Apart from this, a softer tone around the US Treasury bond yields further undermines the Greenback, which, in turn, is seen as a key factor lending some support to the GBP/USD pair.

That said, rising bets for further policy tightening by the Federal Reserve (Fed) should help limit the downside for the USD and cap gains for the GBP/USD pair. Investors now seem convinced that the US central bank will stick to its hawkish stance for longer amid the risk of higher inflation print for January, due for release on Tuesday.

The speculations were fueled by the revision of the previous month's data, which showed that consumer prices rose in December instead of falling as estimated previously. Furthermore, the University of Michigan survey's one-year inflation expectations climbed to 4.2% this month from 3.9% in January. This, in turn, favours the USD bulls.

Apart from this, a dovish assessment of the Bank of England (BoE) decision last week warrants some caution before placing aggressive bullish bets around the GBP/USD pair. In the absence of any relevant market-moving economic releases, traders now look to Fed Governor Michelle Bowman's speech for some impetus ahead of the UK jobs data on Tuesday.

Technical levels to watch

GBP/USD

Overview
Today last price	1.2106
Today Daily Change	0.0052
Today Daily Change %	0.43
Today daily open	1.2054

Trends
Daily SMA20	1.2257
Daily SMA50	1.2186
Daily SMA100	1.1845
Daily SMA200	1.1945

Levels
Previous Daily High	1.2139
Previous Daily Low	1.2047
Previous Weekly High	1.2194
Previous Weekly Low	1.1961
Previous Monthly High	1.2448
Previous Monthly Low	1.1841
Daily Fibonacci 38.2%	1.2082
Daily Fibonacci 61.8%	1.2104
Daily Pivot Point S1	1.2021
Daily Pivot Point S2	1.1988
Daily Pivot Point S3	1.1929
Daily Pivot Point R1	1.2113
Daily Pivot Point R2	1.2172
Daily Pivot Point R3	1.2205

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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