GBP/USD hits fresh weekly highs near 1.2150

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  • GBP/USD gains ground for the third day in a row and hits a new weekly high.
  • A combination of factors weigh on the USD and offer support to the pair.
  • Technical buying above the 1.2100 level also contributes to the strong intraday rally.

The pair GBP/USD extends this week’s bounce from near 1.1900, where the all-important 200-day SMA sits, and gains traction for the third day in a row on Thursday. Buying interest picks up during the first half of the European session and lifts the pair to a new weekly high around the 1.2150 area in the last hour.

The US dollar fails to take advantage of its post-NFP recovery and pulls back sharply from a 1-month high, which in turn pushes GBP/USD higher. Uncertainty about the path of Fed rate hikes puts some downward pressure on US Treasury yields. This, coupled with a good recovery in global risk sentiment, weighs on the USD as a safe haven.

Apart from this, the possibility that they have been activated some short-term stops above the 1.2100 level seems to contribute to the positive intraday movement of GBP/USD. That being said, the prospect of further monetary tightening by the Fed should help limit the dollar’s decline and keep any significant rise in GBP/USD at bay, at least for now.

It’s worth remembering that Fed Chairman Jerome Powell acknowledged on Tuesday that rates they could have to rise more than expected if the economy remains strong. A number of FOMC members echoed Powell’s view that additional rate hikes were justified to fully control inflation. This, coupled with fears of an imminent recession, should support the safe-haven dollar.

Apart of this, expectations that the Bank of England (BoE) is nearing the end of the current hike cycle Rates could help cap GBP/USD. In fact, the UK central bank removed the phrase that it would “respond vigorously, as needed”. This suggests that the BoE is increasingly unsure whether further policy tightening is warranted.

Therefore, it remains to be seen if the GBP/USD pair is able to capitalize on the momentum or runs into further selling at higher levels. Market participants are now waiting for the release of the initial weekly US jobless claims data for any momentum. This, coupled with broader risk sentiment, could influence USD price action and allow traders to take advantage of some short-term opportunities.

Technical levels to watch

GBP/USD

Overview
Last price today 1.2132
Today I change daily 0.0064
today’s daily variation 0.53
today’s daily opening 1.2068
Trends
daily SMA20 1.2271
daily SMA50 1.2193
daily SMA100 1.1824
daily SMA200 1.1948
levels
previous daily high 1,211
previous daily low 1.2036
Previous Weekly High 1.2418
previous weekly low 1,205
Previous Monthly High 1.2448
Previous monthly minimum 1.1841
Fibonacci daily 38.2 1.2082
Fibonacci 61.8% daily 1.2064
Daily Pivot Point S1 1.2033
Daily Pivot Point S2 1.1998
Daily Pivot Point S3 1.1959
Daily Pivot Point R1 1.2107
Daily Pivot Point R2 1.2145
Daily Pivot Point R3 1,218
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Source: Fx Street

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