GBP/USD pulls back from daily highs, remains offered amid USD weakness

  • GBP/USD gains some positive traction on Monday, although it lacks follow-through.
  • A combination of factors puts some pressure on the dollar and offers support.
  • Bulls seem unimpressed by the UK government’s twist on its fiscal plans.

The pair GBP/USD receives new offers on the first day of a new trading week, although struggles to find acceptance or capitalize on the move above 1.1300. The pair remains above 1.1250 during the early European session, amid modest US dollar weakness.

A strong recovery in global risk sentiment coupled with a softer tone around US Treasury yields turn out to be a key factor putting downward pressure on the haven dollar. That said, a combination of factors help limit deeper losses for the dollar and keep GBP/USD capped, at least for now.

Investors remain concerned about potential economic headwinds from rapidly rising borrowing costs and geopolitical risk. Furthermore, China’s “zero-COVID” policy has fueled recession fears. This, coupled with Fed expectations, should continue to act as a tailwind for US bond yields and offer some dollar support.

The GBP/USD pair, for its part, reacted little to the fact that the new UK finance minister, Jeremy Hunt, reversed the controversial economic package announced in the mini-budget on September 23rd. This, in turn, suggests that the path of least resistance for the pair is to the downside and warrants some caution for aggressive bull traders.

No major macroeconomic data will be released in the UK, while the Empire State Manufacturing Index will be released on the US economic docket later in the early North American session. This, along with US bond yields and general market risk sentiment, could weigh on the dollar and give GBP/USD some momentum.

Technical levels to watch

GBP/USD

Overview
last price today 1.1275
Today I change daily 0.0104
Today’s daily variation in % 0.93
Daily opening today 1.1171
Trends
daily SMA20 1.1139
daily SMA50 1.1515
daily SMA100 1.1847
daily SMA200 1.2478
levels
Previous daily high 1.1367
Previous Daily Low 1.1152
Previous Weekly High 1.1381
Previous Weekly Low 1.0924
Previous Monthly High 1.1738
Previous Monthly Low 1.0339
Daily Fibonacci of 38.2%. 1.1234
Fibonacci 61.8% daily 1.1285
Daily Pivot Point S1 1.1093
Daily Pivot Point S2 1.1016
Daily Pivot Point S3 1.0879
Daily Pivot Point R1 1.1308
Daily Pivot Point R2 1.1445
Daily Pivot Point R3 1.1522

Source: Fx Street

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