GBP/USD steadily climbs back closer to 1.2700 mark amid subdued USD price action

GBP/USD regains positive traction and stalls its retracement slide from a multi-month peak.
The BoE’s hawkish outlook continues to underpin the GBP and acts as a tailwind for the pair.
The USD fails to build on Friday’s bounce from over a four-month low and also lends support.

Haresh Menghani FXStreet

The GBP/USD pair attracts some dip-buying around the 1.2655 area during the Asian session on Monday and for now, seems to have stalled its retracement slide from the vicinity of the 1.2800 mark, or a near four-month peak touched last week. Spot prices climb to a fresh daily high, around the 1.2685 region in the last hour and draw support from a combination of factors.

The British Pound (GBP) is underpinned by the Bank of England's (BoE) hawkish stance, saying that monetary policy is likely to need to be restrictive for an extended period of time as key indicators of UK inflation remain elevated. Adding to this, the flash UK PMIs released on Friday indicated growth picking up some momentum at the end of the year, which should allow the economy to dodge recession during the fourth quarter as a whole. This, along with subdued US Dollar (USD) price action, acts as a tailwind for the GBP/USD pair.

Meanwhile, the Federal Reserve (Fed) last week signalled an end to its monetary policy tightening cycle and pencilled in at least three 25 basis points (bps) rate cuts in 2024. That said, a duo of influential Fed officials pushed back against expectations for early interest rate cuts and prompted an intraday USD short-covering rally on Friday, from its lowest level since July 31. The recovery momentum, however, lacks follow-through in the wake of the Fed's dovish shift and the risk-on mood, which tends to undermine the safe-haven buck.

Moving ahead, there isn't any relevant market-moving economic data due for release from the UK or the US on Monday, leaving the GBP/USD pair at the mercy of the USD price dynamics. Nevertheless, the aforementioned supportive fundamental backdrop suggests that the path of least resistance for spot prices is to the upside. Some follow-through buying beyond the 1.2700 mark will reaffirm the positive outlook and allow bullish traders to retest the multi-month peak touched in the aftermath of the BoE policy decision last Thursday.

Technical levels to watch

GBP/USD

Overview
Today last price	1.2687
Today Daily Change	0.0013
Today Daily Change %	0.10
Today daily open	1.2674

Trends
Daily SMA20	1.2608
Daily SMA50	1.2388
Daily SMA100	1.2452
Daily SMA200	1.2503

Levels
Previous Daily High	1.2791
Previous Daily Low	1.2669
Previous Weekly High	1.2794
Previous Weekly Low	1.2501
Previous Monthly High	1.2733
Previous Monthly Low	1.2096
Daily Fibonacci 38.2%	1.2715
Daily Fibonacci 61.8%	1.2744
Daily Pivot Point S1	1.2631
Daily Pivot Point S2	1.2589
Daily Pivot Point S3	1.2509
Daily Pivot Point R1	1.2753
Daily Pivot Point R2	1.2833
Daily Pivot Point R3	1.2876

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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