GBP/USD eyes upside above 1.2200 as risk-on mood solidifies on Credit Suisse buyout


  • GBP/USD is building strength for shifting the business above 1.2200 amid the risk-on mood.
  • The Fed would look for a 25 bps rate hike just to maintain pressure on stubborn inflation.
  • A steady BoE policy is in anticipation following the SVB collapse.

The GBP/USD pair is gathering strength is shifting its auction above the round-level resistance of 1.2200 in the Asian session. The Cable has found support as the appeal for the US Dollar Index (DXY) is declining amid rising expectations of a less-hawkish monetary policy by the Federal Reserve (Fed).

S&P500 futures are showing significant gains in the Asian session as UOB has confirmed a buyout for Credit Suisse. This has improved the risk appetite of the market participants as investors’ confidence is getting restored. Sky News reported that under the takeover UBS will pay 3bn Swiss francs (£2.6bn) to acquire Credit Suisse. And, it has agreed to assume up to 5bn francs (£4.4bn) in losses, and 100bn Swiss francs (£88.5bn) in liquidity assistance will be available to both banks.

The USD Index is observing a restrictive upside around 103.80 as banking shakedown in the United States has faded hawkish guidance delivered by Fed chair Jerome Powell, a few weeks back. Inflation has dropped and the requirement of providing assistance to commercial banks is favoring the need for a lower interest rate hike, just to maintain pressure on stubborn inflation.

Analysts at Danske Bank see the Fed raising rates by 25 basis points (bps) despite recent turmoil amid banking sector jitters.

On the United Kingdom front, investors are awaiting the interest rate decision by the Bank of England (BoE), scheduled for Thursday. Analysts at Rabobank also see a quarter-point rate increase and warn that such a scenario is not fully priced in the interest market, “which indicates that the chance of a hold has increased following the collapse of Silicon Valley Bank (SVB).” A 25 bps rate hike by BoE Governor Andrew Bailey would push rates to 4.25%.

But before that, UK inflation data will be keenly watched. Annual headline Consumer Price Index (CPI) data is expected to decline to 9.8% from double-digit figures.

GBP/USD

Overview
Today last price 1.2197
Today Daily Change 0.0022
Today Daily Change % 0.18
Today daily open 1.2175
 
Trends
Daily SMA20 1.2029
Daily SMA50 1.2141
Daily SMA100 1.2049
Daily SMA200 1.1892
 
Levels
Previous Daily High 1.2201
Previous Daily Low 1.21
Previous Weekly High 1.2204
Previous Weekly Low 1.201
Previous Monthly High 1.2402
Previous Monthly Low 1.1915
Daily Fibonacci 38.2% 1.2162
Daily Fibonacci 61.8% 1.2138
Daily Pivot Point S1 1.2116
Daily Pivot Point S2 1.2058
Daily Pivot Point S3 1.2015
Daily Pivot Point R1 1.2217
Daily Pivot Point R2 1.2259
Daily Pivot Point R3 1.2318

 

 

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