• Some cross-driven strength assisted GBP/USD to regain positive traction on Wednesday.
  • Diminishing odds for any further BoE rate hikes could act as a headwind amid Brexit woes.
  • Modest USD strength could further contribute to capping gains ahead of FOMC minutes.

The GBP/USD pair built on the previous day's late bounce from the 1.2470 region and gained some follow-through traction on Wednesday. The pair held on to its modest intraday gains through the early European session and was last seen trading near the daily high, around mid-1.2500s.

Some cross-driven strength stemming from a dramatic turnaround in the EUR/GBP cross turned out to be a key factor that extended some support to the GBP/USD pair. Apart from this, the uptick lacked any obvious fundamental catalyst and runs the risk of fizzling out rather quickly amid diminishing odds for any further interest rate hikes by the Bank of England.

The flash UK PMIs released on Tuesday showed a sharp deceleration in growth during May and reinforced the BoE's gloomy outlook, warning that Britain is on course to enter a technical recession. This, in turn, suggested that the current rate hike cycle could be nearing a pause, which, along with the UK-EU impasse, should hold back the GBP bulls from placing aggressive bets.

On the other hand, the US dollar made a solid comeback and reversed a major part of the overnight slide to a one-month low. This might further contribute to keeping a lid on any meaningful gains for the GBP/USD pair. The fundamental backdrop seems tilted firmly in favour of bearish traders and suggests that any subsequent move up might still be seen as a selling opportunity.

There isn't any major market-moving data due for release from the UK, while the US economic docket features Durable Goods Orders. The focus, however, will remain glued to the FOMC monetary policy meeting minutes, due for release later during the US session. Investors will look for cues about the possibility of a jumbo 75 bps rate hike in June, which will play a key role in influencing the near-term USD price dynamics and provide a fresh impetus to the GBP/USD pair.

Technical levels to watch

GBP/USD

Overview
Today last price 1.254
Today Daily Change 0.0008
Today Daily Change % 0.06
Today daily open 1.2532
 
Trends
Daily SMA20 1.2425
Daily SMA50 1.2809
Daily SMA100 1.3137
Daily SMA200 1.3349
 
Levels
Previous Daily High 1.2599
Previous Daily Low 1.2472
Previous Weekly High 1.2525
Previous Weekly Low 1.2217
Previous Monthly High 1.3167
Previous Monthly Low 1.2411
Daily Fibonacci 38.2% 1.252
Daily Fibonacci 61.8% 1.255
Daily Pivot Point S1 1.247
Daily Pivot Point S2 1.2407
Daily Pivot Point S3 1.2343
Daily Pivot Point R1 1.2597
Daily Pivot Point R2 1.2661
Daily Pivot Point R3 1.2723

 

 

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