#GBPUSD @ 1.07578 gains some positive traction on Tuesday, though the uptick lacks bullish conviction. (Pivot Orderbook analysis)

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• GBP/USD gains some positive traction on Tuesday, though the uptick lacks bullish conviction.
• Concerns about the UK’s ballooning public debt act as a headwind for the British pound.
• Aggressive Fed rate hike bets help limit the USD corrective slide and contribute to capping.

The pair currently trades last at 1.07578.

The previous day high was 1.0931 while the previous day low was 1.0339. The daily 38.2% Fib levels comes at 1.0565, expected to provide support. Similarly, the daily 61.8% fib level is at 1.0705, expected to provide support.

The GBP/USD pair trims a part of its intraday gains and retreats to mid-1.0700s during the early North American session, though is still up over 0.50% for the day.

The new UK government’s mini-budget announcement last week as well as the plan to subsidise energy bills for households and businesses sparked concern about spiralling public debt. This is evident from a fresh slump in the UK fixed-income market, which pushes the 30-year yield to its highest level since 2007. Furthermore, the fiscal package is expected to fuel already high inflation and create additional economic headwinds, which, in turn, is seen as acting as a headwind for the British pound.

That said, a modest US dollar weakness continues to lend support to the GBP/USD pair amid speculations that the Bank of England could intervene in the FX market to stabilise the domestic currency. The risk-on impulse, as depicted by the strong rally in the equity markets, turns out to be a key factor undermining the safe-haven greenback. That said, rising US Treasury bond yields, bolstered by expectations for a more aggressive policy tightening by the Fed limits any meaningful USD corrective pullback.

The mixed fundamental backdrop warrants some caution for aggressive traders and before placing fresh directional bets around the GBP/USD pair. From a technical perspective, the lack of strong buying interest, especially after the recent free-fall to an all-time low, suggests that the near-term bearish trend might still be far from being over. Hence, any further move up could be seen as a selling opportunity amid the lack of confidence in the UK government’s ability to manage the ballooning debt.

Technical Levels: Supports and Resistances

GBPUSD currently trading at 1.0782 at the time of writing. Pair opened at 1.0687 and is trading with a change of 0.89 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 1.1424, 50 SMA 1.1783, 100 SMA @ 1.2029 and 200 SMA @ 1.2641.

The previous day high was 1.0931 while the previous day low was 1.0339. The daily 38.2% Fib levels comes at 1.0565, expected to provide support. Similarly, the daily 61.8% fib level is at 1.0705, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.0374, 1.006, 0.9782
• Pivot resistance is noted at 1.0966, 1.1244, 1.1558

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