- GBP/USD gained traction for the second consecutive session on Thursday.
- Dovish Fed expectations undermined the USD and remained supportive.
- The set-up supports prospects for a further near-term appreciating move.
The GBP/USD pair refreshed daily tops heading into the North American session, with bulls still awaiting a sustained move beyond the 1.3800 mark. The mentioned handle coincides with the very important 200-day SMA and should now act as a key pivotal point for short-term traders.
The US dollar was seen consolidating its recent losses to one-month lows amid uncertainty over the likely timing of the Fed's tapering plan. This was evident from some follow-through decline in the US Treasury bond yields. Apart from this, the underlying bullish tone in the financial markets undermined the safe-haven greenback and pushed the GBP/USD pair higher for the second consecutive session on Thursday.
Looking at the technical picture, the GBP/USD pair, so far, has struggled to break through a confluence hurdle comprising of 200-period SMA on the 4-hour chart and the 50% Fibonacci level of the 1.3984-1.3602. A sustained move beyond will be seen as a fresh trigger for bullish traders and set the stage for an extension of the recent bounce from the 1.3600 round-figure mark, or one-month low touched on August 20.
Meanwhile, technical indicators on hourly charts maintained their bullish bias and are still far from being in the overbought territory. Moreover, oscillators on the daily chart have just started moving into the positive territory. The set-up supports prospects for an eventual breakthrough the mentioned barrier.
That said, it will still be prudent to wait for some follow-through buying beyond the 1.3800 mark before positioning for any further appreciating move. The GBP/USD pair might then accelerate the momentum towards the 61.8% Fibo. level, around the 1.3840 region en-route the next hurdle near the 1.3875-80 supply zone.
On the flip side, the 38.2% Fibo. level, around the 1.3750-45 region now seems to protect the immediate downside ahead of the weekly swing low, around the 1.3730 area touched on Wednesday. Failure to defend the mentioned support levels might prompt some technical selling and drag the GBP/USD pair below the 1.3700 mark.
The downward trajectory could further get extended towards intermediate support near the 1.3640 level before the GBP/USD pair eventually drops to challenge the 1.3600 round-figure mark.
GBP/USD 4-hour chart
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.