GBP/USD trims a part of its intraday gains, holds comfortably above 1.2100 amid weaker USD

GBP/USD gains positive traction for the second straight day, though lacks follow-through.
Bets for less aggressive Fed rate hikes weigh heavily on the USD and remain supportive.
Banking crisis woes, expectations that the BoE will pause its rate-hiking cycles cap gains.

Haresh Menghani FXStreet

The GBP/USD pair builds on the previous day's strong move up and scales higher for the second successive day on Friday. The pair, however, retreats a few pips from the daily peak touched during the early part of the European session and is currently placed around the 1.2135-1.2130 region, still up over 0.20% for the day.

Expectations that the Federal Reserve will adopt a less hawkish stance in the wake of worsening economic conditions exert heavy downward pressure on the US Dollar, which, in turn, lends support to the GBP/USD pair. Last week's collapse of two mid-size US banks - Silicon Valley Bank and Signature Bank - forced investors to scale back bets for more aggressive policy tightening by the US central bank. In fact, the markets are now pricing in a nearly 90% chance of a smaller 25 bps lift-off the upcoming FOMC meeting on March 21-22, which, along with signs of stability in the financial markets, weigh on the safe-haven Greenback.

Multi-billion-dollar lifelines for troubled banks in the US and Europe ease fears about widespread contagion. This, in turn, boosts investors' confidence, which is evident from a modest recovery in the equity markets. That said, persistent worries about a full-blown global banking crisis keep a lid on the optimism. Furthermore, the Bank of England's (BoE) quarterly survey showed that the median UK public's expectations for inflation for the coming year dropped sharply in February. This reaffirms bets that the Bank of England (BoE) will pause its rate-hiking cycle next week and contributes to capping the GBP/USD pair.

Market participants now look to the release of the Michigan US Consumer Sentiment Index for short-term opportunities later during the early North American session on Friday. The focus, however, will remain on the key central bank event risks next week - the outcome of the highly-anticipated FOMC policy meeting, scheduled to be announced next Wednesday, followed by the BoE policy meeting on Thursday. Nevertheless, the GBP/USD pair seems poised to register modest weekly gains and remains at the mercy of the USD price dynamics.

Technical levels to watch

GBP/USD

Overview
Today last price	1.2133
Today Daily Change	0.0024
Today Daily Change %	0.20
Today daily open	1.2109

Trends
Daily SMA20	1.2022
Daily SMA50	1.2139
Daily SMA100	1.2043
Daily SMA200	1.1892

Levels
Previous Daily High	1.2128
Previous Daily Low	1.2027
Previous Weekly High	1.2114
Previous Weekly Low	1.1803
Previous Monthly High	1.2402
Previous Monthly Low	1.1915
Daily Fibonacci 38.2%	1.2089
Daily Fibonacci 61.8%	1.2066
Daily Pivot Point S1	1.2048
Daily Pivot Point S2	1.1988
Daily Pivot Point S3	1.1948
Daily Pivot Point R1	1.2149
Daily Pivot Point R2	1.2189
Daily Pivot Point R3	1.225

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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