#GBPUSD @ 1.24209 grinds higher after refreshing the multi-day top., @nehcap view: Further upside expected (Pivot Orderbook analysis)

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• GBP/USD grinds higher after refreshing the multi-day top.
• US Dollar remains pressured after unimpressive Federal Reserve decision.
• Statistics from United Kingdom have been mixed, mostly upbeat for GBP/USD.
• Bank of England is up for 50 bps rate hike and can please Cable buyers if avoiding recession fears.

The pair currently trades last at 1.24209.

The previous day high was 1.2444 while the previous day low was 1.2248. The daily 38.2% Fib levels comes at 1.2369, expected to provide support. Similarly, the daily 61.8% fib level is at 1.2323, expected to provide support.

GBP/USD remains firmer around the six-month high, making rounds to 1.2420-30 after refreshing the multi-day top, as the Cable pair traders await the Bank of England (BOE) decision during early Thursday. The British Pound recently cheered broadly softer US Dollar as the Federal Reserve (Fed) failed to impress the greenback buyers. However, the fears of a recession in the United Kingdom (UK), highlighted by the recently softer British data, seem to challenge the Cable bulls of late.

Although the GBP/USD pair stays sturdy near the multi-day high and is up for the weekly gain, the major reason is the broad US Dollar weakness than the fundamental strength of the United Kingdom, as portrayed by the latest statistic from Britain.

That said, UK’s headline Consumer Price Index (CPI) eased from the 41-year high of 11.1% to 10.7% YoY in November, compared to the 10.9% YoY market forecast. Further, the British Unemployment Rate matched 3.7% market forecast during the three months to October while Claimant Count Change marked a positive surprise of 30.5K in November versus -13.3K expected and -6.4K prior. Alternatively, Average Earnings and monthly Gross Domestic Product (GDP) for October could be cited as the positive catalysts for the pair.

In addition to the mixed UK data, a division among the Bank of England (BOE) policymakers also challenges the GBP/USD pair buyers. Although the “Old Lady”, as the BOE is informally termed sometimes, is likely to announce 50 basis points (bps) of an interest rate lift, not all policymakers are in favor of the move as Silvana Tenreyro and Swati Dhingra voted for smaller increases of a quarter and half a percentage point respectively in November meeting. Also, BOE Governor Andrew Bailey’s comments suggesting the terminal rate not be as high as previously predicted by the markets offer extra challenges for the rate-setters and the Cable buyers.

While the aforementioned discussion highlighted the pessimism surrounding the UK economy, the United States Federal Reserve (Fed) fell short of convincing the US Dollar buyer and superseded major negatives for the GBP/USD pair.

That said, the Fed delivered the 50 bps rate hike, as expected, and also upwardly revised the dot-plot to suggest 5.1% as the terminal rate versus 4.6% shown in September’s Statement of Economic Projections (SEP). Further details of the event suggested that the inflation forecasts were upwardly revised and the growth estimations were cut down for 2023 and 2024.

Additionally, Federal Reserve (Fed) Chairman Jerome Powell tried to maintain his hawkish image while noting that the ultimate level of rates is more important than how fast they go. The policymaker also added that the Federal Open Market Committee (FOMC) needs to hold rates at their peak until policymakers are “really confident” inflation comes down in a sustained way.

Despite all the details that could have lured the US Dollar bulls, the Fed failed to impress the greenback buyers as most of them were expected. Also, the recently softer US inflation data and receding Covid fears from China exerted additional downside pressure on the USD and favored the GBP/USD buyers.

To sum up, the GBP/USD pair traders have recently cheered the US Dollar weakness, rather than having strong fundamentals to refresh the multi-day top. As a result, the Bank of England (BOE) may not be able to keep the Cable bulls on board amid the looming economic crisis, namely the recession fears and British workers’ agitations.

Hence, the 50 bps rate hike may not help the GBP/USD to go much higher to the north of the recent tops and could trigger the pair’s pullback should the details of the BOE monetary policy meeting appear pessimistic.

Alternatively, a surprise 75 bps rate hike won’t hesitate to propel the British Pound toward the north.

GBP/USD pokes 61.8% Fibonacci retracement level of its January-September downside, also known as the golden ratio, as it seesaws around a six-month high. In addition to the key Fibonacci ratio of around 1.2350, the overbought conditions of the Relative Strength Index (RSI) line, placed at 14, also challenge the Cable buyers.

It should be noted that the British Pound also portrays a bull cross between the 50-DMA and the 100-DMA and signals further upside. That said, it is a condition where the near-term moving average crosses the longer one from below and suggests the quote’s further advances.

In a case where the British Pound crosses the 1.2350 hurdle, May’s peak surrounding 1.2665 will act as the last defense of the GBP/USD pair buyers.

Following that, early April’s low near 1.2975, as well as March’s bottom near 1.30000 will be in focus.

On the flip side, an upward-sloping support line from early November puts a floor under the GBP/USD prices near 1.2315, a break of which could quickly drag the Cable towards the 200-DMA support of 1.2105.

It should be noted that the 50% Fibonacci retracement level and the 50-DMA, respectively around 1.2050 and 1.1715, could gain the GBP/USD bear’s attention past 1.2105.

Trend: Further upside expected

Technical Levels: Supports and Resistances

GBPUSD currently trading at 1.2429 at the time of writing. Pair opened at 1.2359 and is trading with a change of 0.57% % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.209, 50 SMA 1.1668, 100 SMA @ 1.1673 and 200 SMA @ 1.2113.

The previous day high was 1.2444 while the previous day low was 1.2248. The daily 38.2% Fib levels comes at 1.2369, expected to provide support. Similarly, the daily 61.8% fib level is at 1.2323, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.2256, 1.2154, 1.206
• Pivot resistance is noted at 1.2453, 1.2546, 1.2649

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