- GBP/USD oscillates in a narrow trading band below the one-year high touched on Monday.
- The ascending trend channel points to a well-established uptrend and favours bullish traders.
- Traders now seem reluctant ahead of the US CPI on Wednesday and the BoE on Thursday.
The GBP/USD pair struggles to gain any meaningful traction and seesaws between tepid gains/minor losses through the early European session on Tuesday. The pair is currently placed around the 1.2620 region and remains well within the striking distance of a one-year high touched the previous day.
The US Dollar (USD) gains some positive traction for the second successive day amid easing fears of a full-blown banking crisis in the US and turns out to be a key factor acting as a headwind for the GBP/USD pair. Apart from this, a generally weaker tone around the equity markets further benefits the safe-haven buck, though speculations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle caps the upside.
This, along with bets that the Bank of England (BoE) will hike interest rates by another 25 bps later this week, underpins the British Pound and acts as a tailwind for the GBP/USD pair. Traders also seem reluctant to place aggressive bets ahead of the release of the latest US consumer inflation figures on Wednesday and the key central bank event risk, the highly-anticipated BoE monetary policy meeting on Thursday.
From a technical perspective, the GBP/USD pair on Monday faced rejection near a resistance marked by the top end of an upward-sloping channel. That said, the subsequent slides show some resilience below the 1.2600 mark. This, in turn, reaffirms a well-established short-term uptrend. The constructive setup is reinforced by bullish oscillators on the daily chart, which are still far from being in the overbought territory.
The aforementioned technical setup supports prospects for a further near-term appreciating move. Traders, however, might wait for a breakout through the trend-channel resistance, currently around the 1.2670-1.2675 region, before placing fresh bets. The GBP/USD pair might then aim to surpass the 1.2700 mark and accelerate the momentum towards the next relevant hurdle near the 1.2775-1.2780 region en route to the 1.2800 round figure.
On the flip side, weakness below the 1.2600 mark is likely to attract some buyers near the 1.2565-1.2560 horizontal support. However, some follow-through selling could make the GBP/USD pair vulnerable to sliding towards the 1.2500 psychological mark, which coincides with the 100-period Simple Moving Average (SMA) on the 4-hour chart. Spot prices could eventually drop to the ascending channel support, currently around the 1.2465 area.
GBP/USD 4-hour chart
Key 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.