#GBPUSD @ 1.24431 retreats further from the weekly low set on Wednesday, albeit lacks follow-through. (Pivot Orderbook analysis)

…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for PREMIUM VERSION HERE to read full post below containing analysis. In case of any error or you think you are not able to read the full post below, please email us at support#nehcap.com [lwa][/s2If] [s2If current_user_can(access_s2member_level4)]

• GBP/USD retreats further from the weekly low set on Wednesday, albeit lacks follow-through.
• The stronger UK CPI lifts bets for a 25 bps BoE rate hike in May and lends support to the GBP.
• Bets for more Fed rate hikes underpin the USD and should act as a headwind for the major.

The pair currently trades last at 1.24431.

The previous day high was 1.2474 while the previous day low was 1.2392. The daily 38.2% Fib levels comes at 1.2443, expected to provide support. Similarly, the daily 61.8% fib level is at 1.2424, expected to provide support.

The GBP/USD pair comes under some selling pressure on Wednesday and retreats further from the weekly high, around the 1.2470-1.2475 area touched the previous day. The pair remains on the defensive through the early part of the European session and is currently placed near the daily low, around the 1.2420 region.

A combination of factors continues to act as a tailwind for the US Dollar (USD), which, in turn, is seen exerting some downward pressure on the GBP/USD pair. The prospects for further policy tightening by the Federal Reserve (Fed), along with a weaker rise sentiment, lend some support to the safe-haven Greenback. That said, rising bets for an additional interest rate hike by the Bank of England (BoE) might hold back bearish traders from placing aggressive bets and help limit losses for the major.

The markets now seem convinced that the US central bank will lift rates by 25 bps at the next policy meeting in May and have been pricing in a small chance of another rate hike in June. The bets were reaffirmed by the recent hawkish comments by several Fed officials. Moreover, the incoming macro data from the US pointed to a resilient economy and fueled concerns that the Fed may have more work to do to tame stubbornly high inflation in the US amid easing fears of a full-blown banking crisis.

This further fuel worries about the economic headwinds stemming from rising borrowing costs and tempers investors’ appetite for riskier assets., which is evident from a generally weaker tone around the equity markets. The anti-risk lends additional support to the safe-haven Greenback and weighs on the GBP/USD pair. That said, the stronger UK inflation figures released on Wednesday should keep pressure on the BoE to raise interest rates further and act as a tailwind for spot prices.

The aforementioned mixed fundamental backdrop makes it prudent to wait for strong follow-through selling before placing aggressive bearish bets around the GBP/USD pair in the absence of any relevant macro data from the UK. The US economic docket features the release of the usual Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index 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.

Technical Levels: Supports and Resistances

GBPUSD currently trading at 1.2438 at the time of writing. Pair opened at 1.244 and is trading with a change of -0.02 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.2394, 50 SMA 1.2195, 100 SMA @ 1.2194 and 200 SMA @ 1.1921.

The previous day high was 1.2474 while the previous day low was 1.2392. The daily 38.2% Fib levels comes at 1.2443, expected to provide support. Similarly, the daily 61.8% fib level is at 1.2424, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.2397, 1.2354, 1.2315
• Pivot resistance is noted at 1.2478, 1.2517, 1.256

[/s2If]
Join Our Telegram Group