GBP/USD running out of steam trying for more above 1.39

Sterling is pushing hard, but Brexit concerns and market sentiment continue to cap Sterling gains.
Little UK data means the pair is exposed to swings in risk appetite as ECB rate decision looms.

Joshua Gibson FXStreet

GBP/USD is moving sideways ahead of the European market session, testing into highs at 1.3910.

The Sterling is grinding upwards in early Thursday trading, trying to eat away at the drop-off that occurred in the first half of Wednesday. The Pound is proving resilient, but upwards momentum is waning quickly as Brexit concerns continue to plague the UK.

The Bank of England (BOE) has a sunny outlook on the United Kingdom's economy in the face of continuously-improving economic data, and the central bank is on pace to begin lifting interest rates, with many market analysts calling for the first in a series of small increases to begin in mid-May. Despite the good fortune and positive tone, The GBP is still being weighed down by concerns about the political and economic landscape after Brexit begins next March. Many business leaders are still unclear about what kind of regulatory framework they will be dealing with across borders, and with European Union (EU) leaders in Brussels seeming to balk at Prime Minister Theresa May's cherry-picking of which EU regulatory agencies will continue to have a say in UK business dealings, and vice versa, the path forward is still unclear. Market participants are already keenly aware that when Brexit begins to unfurl next March, there are no substantial trade agreements in place between the EU and the UK, and the upheaval will only continue to worsen as a 'soft Brexit' scenario is starting to look more and more unlikely.

Little data in slated for the UK today, but the GBP/USD can still expect some knock-on volatility when the European Central Bank (ECB) releases their latest Interest Rate Decision at 12:45 GMT, and markets may buck as traders react to the ECB's Monetary Policy Statement and Press Conference at 13:30 GMT, where ECB President Mario Draghi's word choices will be very carefully monitored and interpreted.

GBP/USD Technicals

The pair has been drifting upwards steadily, and despite yesterday's close lower, remains in deeply bullish territory trading well above the 200-day SMA. While the pair is still trying to fight upwards, the H4 chart shows a bearish trendline gathering strength just beyond the current price action and a push upwards may run out of steam at current resistance. Current support levels to watch will be 1.3815 and 1.3715, while resistance is pricing in at 1.3925 and 1.4065.

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

USD/JPY consolidates near 160.50 intervention zone ahead of FOMC decision

USD/JPY remains close to the 160.50 intervention zone during the Asian session on Wednesday. Despite the BoJ's rate hike to its highest level since 1995, Japan's borrowing costs remain significantly lower than those of peer nations such as the US. Moreover, the BoJ's more cautious stance on bonds undermines the Japanese Yen and supports the currency pair. Meanwhile, the US Dollar remains on the back foot amid the optimism over the US-Iran peace deal and ahead of the Fed policy decision, capping spot prices.

AUD/USD holds steady above 0.7050; looks to Fed decision for fresh impetus

AUD/USD is seen consolidating above mid-0.7000s during the Asian session as traders await the outcome of a two-day FOMC meeting later this Wednesday. In the meantime, the optimism over an interim peace deal between the US and Iran keeps the US Dollar bulls on the defensive. This, along with the RBA's hawkish pause on Tuesday, acts as a tailwind for the currency pair.

Gold remains below 200-SMA as traders await FOMC rate decision

Gold preserves weekly gains registered over the past two days, though it remains below a technically significant 200-day SMA through the Asian session on Wednesday. Traders now seem hesitant and are keenly awaiting the highly anticipated Fed rate decision before placing fresh directional bets. In the meantime, the US-Iran interim peace agreement keeps the US Dollar bulls on the defensive, which might continue to act as a tailwind for the bullion.

Coinbase outlines 'Everything Exchange' vision with planned tokenized stocks and AI advisor

Crypto exchange Coinbase unveiled a broad slate of new products on Tuesday, outlining plans to expand into tokenized equities and AI-powered investment tools in its pursuit of becoming an "Everything Exchange." A centerpiece of the roadmap is Coinbase's planned launch of tokenized US equities for customers outside the United States.

The most important event will be the Fed meeting with Mr. Warsh now in charge

The most important event will be the Fed meeting on Wednesday, with Mr. Warsh now in charge. As more than one analyst points out, the case for holding rates the same is strengthened by the Iran deal and the prospect of the Strait re-opening, although nobody thinks Warsh can marshal enough doves to do a cut this time.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.