GBP/USD trades with mild positive bias just below 1.2700, lacks bullish conviction


  • GBP/USD scales higher for the second straight day and recovers further from a one-month low.
  • Wednesday’s hotter UK CPI dashed hopes for an early rate cut by the BoE and underpins the GBP.
  • Reduced bets for a more aggressive Fed easing act as a tailwind for the USD and should cap gains.

The GBP/USD pair attracts some buyers for the second straight day on Wednesday and looks to build on the previous day's goodish bounce from sub-1.2600 levels, or over a one-month low. Spot prices currently trade just below the 1.2700 round-figure mark and remain well supported by reduced bets for an early interest rate cut by the Bank of England (BoE).

The UK Office for National Statistics (ONS) reported on Wednesday that the Consumer Price Index (CPI) rose for the first time in 10 months, to 4.0% in December from a more-than-two-year low of 3.9% in the previous month. Adding to this, the core gauge, which excludes volatile food, energy, alcohol and tobacco prices, was unchanged at 5.1% in December as compared to a fall to 4.9% anticipated. The markets were quick to react and are now pricing in a roughly 60% chance that the BoE will start to cut rates by mid-May, down from just over 80% late on Tuesday, which, in turn, is seen underpinning the British Pound (GBP).

The US Dollar (USD), on the other hand, edges lower amid some profit-taking following the recent run-up to the highest level since December 13 and turns out to be another factor acting as a tailwind for the GBP/USD pair. That said, investors continue to scale back their expectations for a March interest rate cut by the Federal Reserve (Fed) following the release of the upbeat US Retail Sales figures on Wednesday. This remains supportive of elevated US Treasury bond yields, which should help limit any meaningful USD downfall and hold back traders from placing aggressive bullish bets around the currency pair.

Meanwhile, speculations that the Fed will keep rates higher for longer, along with geopolitical risks and China's economic woes, continue to weigh on investors' sentiment. This is evident from a generally weaker tone around the equity markets, which could further benefit the Greenback's relative safe-haven status against its British counterpart. Hence, it will be prudent to wait for strong follow-through buying before confirming that the GBP/USD pair has formed a near-term bottom and positioning for a further appreciating move in the absence of any relevant market-moving economic releases from the UK.

Later during the early North American session, traders will take cues from the US economic docket – featuring the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, Building Permits and Housing Starts. Apart from this, a scheduled speech by Atlanta Fed President Raphael Bostic and the US bond yields will influence the USD price dynamics, providing some impetus to the GBP/USD pair.

Technical levels to watch

GBP/USD

Overview
Today last price 1.2693
Today Daily Change 0.0008
Today Daily Change % 0.06
Today daily open 1.2685
 
Trends
Daily SMA20 1.2713
Daily SMA50 1.2618
Daily SMA100 1.2451
Daily SMA200 1.2549
 
Levels
Previous Daily High 1.2696
Previous Daily Low 1.2597
Previous Weekly High 1.2786
Previous Weekly Low 1.2674
Previous Monthly High 1.2828
Previous Monthly Low 1.2501
Daily Fibonacci 38.2% 1.2658
Daily Fibonacci 61.8% 1.2635
Daily Pivot Point S1 1.2622
Daily Pivot Point S2 1.256
Daily Pivot Point S3 1.2522
Daily Pivot Point R1 1.2722
Daily Pivot Point R2 1.2759
Daily Pivot Point R3 1.2822

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

AUD/USD: Gains look capped near 0.6800

AUD/USD: Gains look capped near 0.6800

AUD/USD lost ground for the third session in a row and revisited the 0.6720-0.6715 band following the generalized bearish performance of commodities and ahead of the key release of the Australian labour market report.

AUD/USD News

EUR/USD keeps the bid tone in place ahead of ECB

EUR/USD keeps the bid tone in place ahead of ECB

EUR/USD added to Tuesday’s advance and rose to new highs around 1.0950 in response to extra weakness in the Greenback and rising expectations prior to the ECB gathering on Thursday.

EUR/USD News

Gold retreats from record highs, retains the bullish stance

Gold retreats from record highs, retains the bullish stance

Gold trades flat on the day below $2,470 after touching a new record high above $2,480 in the Asian session on Wednesday. The modest recovery seen in the US Treasury bond yields causes XAU/USD to consolidate its gains.

Gold News

Ripple extends gains as XRP traders await end of SEC vs. Ripple lawsuit

Ripple extends gains as XRP traders await end of SEC vs. Ripple lawsuit

Ripple (XRP), XRP Ledger’s native token, extended gains by nearly 7% on Wednesday. The sixth largest asset by market capitalization rallied for the tenth consecutive day and erased all losses from the last 99 days. 

Read more

Australian Unemployment Rate seen steady at 4% in June

Australian Unemployment Rate seen steady at 4% in June

With sentiment dominating financial markets, the Australian Bureau of Statistics will release the monthly employment report on Thursday at 1:30 GMT. The country is expected to have added 20K new positions in June, while the Unemployment Rate is foreseen to remain steady at 4%.

Read more

Forex MAJORS

Cryptocurrencies

Signatures