GBP/USD Price Analysis: Bullish momentum falters near 1.1300 amid resurgent USD demand


  • GBP/USD rallies for the second successive day and hits a one-week high on Thursday.
  • Talks of a mini-budget U-turn by the UK government boost sterling and offers support.
  • The stronger US CPI-inspired broad-based rally caps the pair near the 1.1300 mark.

The GBP/USD pair gains strong positive traction for the second straight day on Thursday and builds on the previous day's goodish rebound from a nearly two-week low. The momentum lifts spot prices to a one-week high, though falter near the 1.1300 mark following the release of hotter US consumer inflation figures.

The British pound gets a strong lift amid talks that the new UK government could reverse its vast tax cuts announced in the mini-budget in September. The intraday positive move, however, runs out of steam amid a strong pickup in the US dollar demand, bolstered by a stronger US CPI report and hawkish Fed expectations.

From a technical perspective, the GBP/USD pair found decent support on Wednesday near the 50% Fibonacci retracement level of the recent strong recovery from an all-time low. A subsequent move beyond the 100-period SMA on the 4-hour chart prompts some technical selling and contributes to the strong intraday move up.

Bulls, however, face rejection near the 200-hour SMA, which is currently pegged near the 1.1300 round figure and should act as a pivotal point. Meanwhile, technical indicators on the daily chart - though have been recovering from the negative territory - are yet to gain any meaningful traction and warrant caution for bulls.

Hence, it will be prudent to wait for a sustained strength beyond the 1.1300 mark before traders start positioning for any further appreciating move. The GBP/USD pair might then accelerate the momentum towards the next relevant hurdle near the 1.1370 region before aiming to reclaim the 1.1400 round-figure mark.

On the flip side, the 1.1120-1.1115 horizontal zone now seems to protect the immediate downside ahead of the 1.1100 level. Any further decline is likely to find decent support near the 1.1085 region (100-period SMA on the 4-hour chart), which is closely followed by the 38.2% Fibo. level, around the 1.1065-1.1060 zone.

A convincing break below the latter will suggests that the two-day-old uptrend has lost steam and shift the bias back in favour of bearish traders.

GBP/USD 4-hour chart

fxsoriginal

Key levels to watch

GBP/USD

Overview
Today last price 1.119
Today Daily Change 0.0088
Today Daily Change % 0.79
Today daily open 1.1102
 
Trends
Daily SMA20 1.1158
Daily SMA50 1.1549
Daily SMA100 1.1875
Daily SMA200 1.2501
 
Levels
Previous Daily High 1.1134
Previous Daily Low 1.0924
Previous Weekly High 1.1496
Previous Weekly Low 1.1055
Previous Monthly High 1.1738
Previous Monthly Low 1.0339
Daily Fibonacci 38.2% 1.1054
Daily Fibonacci 61.8% 1.1004
Daily Pivot Point S1 1.0972
Daily Pivot Point S2 1.0843
Daily Pivot Point S3 1.0762
Daily Pivot Point R1 1.1183
Daily Pivot Point R2 1.1263
Daily Pivot Point R3 1.1393

 

 

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