GBP/USD spikes beyond 1.2100 mark on upbeat UK PMIs, stronger USD caps gains


  • GBP/USD witnessed a dramatic intraday turnaround from sub-1.2000 levels on Tuesday.
  • The upbeat UK PMI prints boost the Sterling and prompt an aggressive short-covering move.
  • Hawkish Fed expectations, a softer risk tone underpins the USD and caps any further gains.

The GBP/USD pair reverses an early European session dip to levels just below the 1.2000 psychological mark and rallies over 125 pips from the daily low. Spot prices turn positive for the third straight day and climb beyond the 1.2100 round figure, hitting a four-day high in the last hour.

The British Pound rises across the board in reaction to the better-than-expected UK PMI prints and prompts aggressive short-covering around the GBP/USD pair. In fact, S&P Global's flash UK Manufacturing PMI unexpectedly improved to 49.2 in February from 47.0 in the previous month.

The gauge for the UK services sector returns to expansion territory and jumps to 53.3 during the reported month, squashing the recession narrative and boosting the Sterling.

That said, expectations that the Bank of England's (BoE) current rate-hiking cycle is nearing the end, along with sustained US Dollar buying, act as a headwind for the GBP/USD pair. Firming expectations that the Fed will stick to its hawkish stance trigger a fresh leg up in the US Treasury bond yields and underpin the buck.

Apart from this, a generally weaker tone around the equity markets further benefits the Greenback's relative safe-haven status against its British counterpart.

Hence, it will be prudent to wait for strong follow-through buying before placing fresh bullish bets around the GBP/USD pair and positioning for an extension of the recent bounce from the 1.1915 area, or the lowest level since January 6 touched last Friday.

Market participants now look forward to the flash US PMI prints and Existing Home Sales. This, along with the US bond yields and the broader risk sentiment, will drive the USD demand and provide some impetus to the major.

Technical levels to watch

GBP/USD

Overview
Today last price 1.2102
Today Daily Change 0.0066
Today Daily Change % 0.55
Today daily open 1.2036
 
Trends
Daily SMA20 1.218
Daily SMA50 1.2169
Daily SMA100 1.191
Daily SMA200 1.1939
 
Levels
Previous Daily High 1.2057
Previous Daily Low 1.2015
Previous Weekly High 1.227
Previous Weekly Low 1.1915
Previous Monthly High 1.2448
Previous Monthly Low 1.1841
Daily Fibonacci 38.2% 1.2031
Daily Fibonacci 61.8% 1.2041
Daily Pivot Point S1 1.2015
Daily Pivot Point S2 1.1994
Daily Pivot Point S3 1.1973
Daily Pivot Point R1 1.2057
Daily Pivot Point R2 1.2078
Daily Pivot Point R3 1.2099

 

 

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