• GBP/USD jumps to a fresh multi-week high amid the emergence of fresh USD selling.
  • A positive intraday turnaround in the risk sentiment weighs on the safe-haven buck.
  • Brexit woes might cap gains for the British pound ahead of the crucial FOMC decision.

The GBP/USD pair attracts some dip-buying near the 1.1960 area on Monday and shoots to a nearly three-week peak during the mid-European session. The pair is last seen trading around the 1.2065-1.2070 region, up over 0.50% for the day.

Friday's better-than-expected flash UK PMI prints reaffirmed market bets for a 50 bps rate hike by the Bank of England in August and continued acting as a tailwind for the British pound. On the other hand, a positive turnaround in the global risk sentiment - as depicted by a strong intraday rally in the equity markets - weighs on the safe-haven US dollar. In fact, the USD Index languishes near its lowest level since July 5 touched on Friday, which, in turn, is seen as another factor that provides a goodish lift to the GBP/USD pair.

That said, growing concerns about a global economic downturn could keep a lid on any optimistic move in the markets. Apart from this, a goodish rebound in the US Treasury bond yields could offer support to the safe-haven greenback. Investors also remain worried that the UK government's controversial Northern Ireland Protocol Bill could trigger a trade war with the European Union amid the ongoing cost-of-living crisis. This could act as a headwind for sterling and further contribute to capping any meaningful upside for the GBP/USD pair.

Investors might also be reluctant to place directional bets and prefer to wait for the outcome of the crucial FOMC monetary policy meeting on Wednesday. The Fed is widely expected to hike interest rates by 75 bps, though recession fears could force the US central bank to slow the pace of its aggressive policy tightening path. This, in turn, suggests that the Fed's policy outlook will now play a key role in influencing the USD price dynamics and help investors to determine the near-term trajectory for the GBP/USD pair.

In the meantime, the broader market risk sentiment and the trend of US bond yields will drive the USD demand amid absent relevant market moving economic releases from the US, on Monday. Hence, it remains to be seen if the GBP/USD pair is able to capitalize on the positive move or be met with a fresh supply at higher levels. Nevertheless, acceptance above the 1.2045 horizontal resistance could be seen as a trigger for intraday traders and might have already set the stage for a further near-term appreciating move.

Technical levels to watch

GBP/USD

Overview
Today last price 1.2069
Today Daily Change 0.0068
Today Daily Change % 0.57
Today daily open 1.2001
 
Trends
Daily SMA20 1.2007
Daily SMA50 1.2253
Daily SMA100 1.2575
Daily SMA200 1.303
 
Levels
Previous Daily High 1.2064
Previous Daily Low 1.1916
Previous Weekly High 1.2064
Previous Weekly Low 1.1854
Previous Monthly High 1.2617
Previous Monthly Low 1.1934
Daily Fibonacci 38.2% 1.2008
Daily Fibonacci 61.8% 1.1973
Daily Pivot Point S1 1.1923
Daily Pivot Point S2 1.1846
Daily Pivot Point S3 1.1776
Daily Pivot Point R1 1.2071
Daily Pivot Point R2 1.2141
Daily Pivot Point R3 1.2219

 

 

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