The movement of GBPUSD at 1.27523 has been influenced by the strong US Dollar, which is due to the expected tightening by the US Federal Reserve and an overbought equity market in the US.
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- Strong US Dollar, driven by expectations of further tightening by the US Federal Reserve and an overbought US equity market, has influenced the movement.
The pair currently trades last at 1.27523.
The previous day high was 1.2837 while the previous day low was 1.277. The daily 38.2% Fib levels comes at 1.2796, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.2812, expected to provide resistance.
GBP/USD retraces after hitting a new year-to-date (YTD) high of 1.2848 in the last week, down 0.34% back at the 1.2700 handle, amidst a strong US Dollar (USD). Expectations for additional tightening by the US Federal Reserve (Fed) and an “overbought” US equity market dampened investors’ mood. At the time of writing, the GBP/USD is trading at 1.2755 after hitting a high of 1.2806.
In the last week, the Fed held rates unchanged at their June monetary policy but upward revised peak rates at 5.6%, according to the dot plots. That strengthened the US Dollar, which was hurt by Fed Chair Jerome Powell, who struck a neutral tone, disappointing USD bulls, so the GBP/USD continued towards its YTD high. But last Friday, hawkish comments by Fed Governor Christopher Waller and Thomas Barkin weighed on traders after Monday’s holiday in the US.
Notably, the CME FedWatch Tool shows traders seeing a 74% chance of a 25 bps increase to the Federal Funds Rate (FFR) in June, but toward the end of the year, money markets do not believe the Fed would raise rates any further the 5.25%-5.50% area.
Meanwhile, Fed Chair Jerome Powell’s testimony at the US Congress on Wednesday and Thursday is expected to keep the press conference tone. Any hawkish surprises could bolster the greenback, while dovish hints could damage the already battered US Dollar.
Aside from this, the Bank of England (BoE) is expected to raise rates on Thursday, with markets pricing in a 25 bps hike. A day earlier, inflation data in the UK would be revealed, with expectations leaning toward a slowdown in headline and core Consumer Price Index (CPI) in yearly and monthly readings. Upward surprises could further cement market participants’ expectations that the BoE would raise rates by 100 bps toward the end of 2023. That should be positive for the GBP/USD, with traders looking for a reason to challenge the 1.30 figure.
Data-wise, the US economic docket revealed that Housing Starts jumped to a 13-month high, as shown by May’s data revealed by the US Commerce Department. Housing Starts rose by 21.4% MoM, crushing the prior month’s plunge of -2.9%, while Building Permits expanded by 5.2%, above -1.4% contraction in April.
The GBP/USD remains bullish-biased, though the pullback from YTD highs fell shy of testing the May 10 high at 1.2679. GBP/USD’s retracement was sponsored by the Relative Strength Index (RSI) getting out of overbought conditions, while the three-day Rate of Change (RoC) turned negative after eight days of positive readings. The GBP/USD reached the 38.2% Fibonacci Retracement at 1.2711 before settling around current levels. Therefore, the GBP/USD first resistance would be the 1.2800 mark, followed by the YTD high at 1.2848. A breach of the latter will expose 1.2900. Conversely, a drop below 1.2713, and the pair could fall to the 1.26 handle.
Technical Levels: Supports and Resistances
GBPUSD currently trading at 1.2756 at the time of writing. Pair opened at 1.2792 and is trading with a change of -0.28 % .
| Overview | Overview.1 | |
|---|---|---|
| 0 | Today last price | 1.2756 |
| 1 | Today Daily Change | -0.0036 |
| 2 | Today Daily Change % | -0.2800 |
| 3 | Today daily open | 1.2792 |
The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.2513, 50 SMA 1.25, 100 SMA @ 1.2328 and 200 SMA @ 1.2051.
| Trends | Trends.1 | |
|---|---|---|
| 0 | Daily SMA20 | 1.2513 |
| 1 | Daily SMA50 | 1.2500 |
| 2 | Daily SMA100 | 1.2328 |
| 3 | Daily SMA200 | 1.2051 |
The previous day high was 1.2837 while the previous day low was 1.277. The daily 38.2% Fib levels comes at 1.2796, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.2812, expected to provide resistance.
Note the levels of interest below:
- Pivot support is noted at 1.2762, 1.2733, 1.2696
- Pivot resistance is noted at 1.2829, 1.2866, 1.2896
| Levels | Levels.1 |
|---|---|
| Previous Daily High | 1.2837 |
| Previous Daily Low | 1.2770 |
| Previous Weekly High | 1.2848 |
| Previous Weekly Low | 1.2487 |
| Previous Monthly High | 1.2680 |
| Previous Monthly Low | 1.2308 |
| Daily Fibonacci 38.2% | 1.2796 |
| Daily Fibonacci 61.8% | 1.2812 |
| Daily Pivot Point S1 | 1.2762 |
| Daily Pivot Point S2 | 1.2733 |
| Daily Pivot Point S3 | 1.2696 |
| Daily Pivot Point R1 | 1.2829 |
| Daily Pivot Point R2 | 1.2866 |
| Daily Pivot Point R3 | 1.2896 |
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