#GBPUSD @ 1.23562 prods five-week low around mid-1.2300s as US policymakers struggle to avoid default (Pivot Orderbook analysis)

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The pair currently trades last at 1.23562.

The previous day high was 1.247 while the previous day low was 1.2358. The daily 38.2% Fib levels comes at 1.2401, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.2427, expected to provide resistance.

GBP/USD licks its wounds at the 1.5-month low as it makes rounds to 1.2350 during early Thursday, after recently refreshing the multi-day bottom.

The Cable pair’s latest inaction could be linked to the sluggish markets. However, the fears of the US default and the UK inflation numbers’ inability to keep the bulls on the table for long weigh on the Pound Sterling price.

On Wednesday, the UK’s inflation, per the Consumer Price Index (CPI) gauge, rose 8.7% YoY in April compared to 10.1% marked in the last month and 8.2% forecasts. UK Finance Minister Jeremy Hunt said on Wednesday, they “must get inflation down so we could safely cut taxes.” On the same line, Bank of England (BoE) Governor Andrew Bailey previously defended the hawkish bias of the “Old Lady”, as the BoE is informally known.

Even so, the US Dollar strength and risk-off mood weighed on the Cable pair. That said, the US Dollar Index (DXY) seesaws around a nine-week high by tracing firmer Treasury bond yields. However, the latest improvement in the S&P500 Futures, despite a downbeat Wall Street close, puts a floor under the EUR/USD prices.

US House Speaker Kevin McCarthy said that they are sending their negotiators to the White House to try and finish up debt-limit talks. However, reports took rounds that the US House members will go back to their homes after Thursday, to cheer the long weekend, before resuming the debt ceiling negotiations, which in turn escalates the fears of no deal before late May.

Given the escalating fears of the US default, push global rating agencies like Fitch and Moody’sto turn cautious about the US credit rating status. Late on Wednesday, Moody’s warned about the US outlook change while Fitch put US’ AAA on Rating Watch Negative status.

It’s worth mentioning that the Minutes of the latest Federal Open Market Committee (FOMC) Meeting highlighted the policymakers’ division as some suggest it is appropriate to hike the rates while others advocate for a policy pivot. That said, Atlanta Fed President Raphael Bostic said, “‘We’re right at the beginning of the hard part’ of taming inflation.” Additionally, Federal Reserve Governor Christopher Waller mentioned that he doesn’t support stopping rate hikes unless getting clear evidence that inflation is moving down toward the 2% objective.

Against this backdrop, the S&P500 Futures rise half a percent despite Wall Street’s downbeat closing whereas the US Treasury bond yields struggle to extend the latest recovery at the multi-day tops.

Looking forward, the progress on the US debt ceiling talks will be crucial to watch for the GBP/USD pair traders for clear directions as the policymakers are set to go on holiday after Thursday. Hence, a lack of deal before the end of today can only save the pair from the bear’s attack. Apart from the risk catalysts, the second readings of the US Q1 GDP will join the US weekly Jobless Claims, the Chicago Fed National Activity Index and Pending Home Sales to direct Cable prices.

A daily closing below a six-week-old ascending support line, now immediate resistance near 1.2400, keeps GBP/USD on the bear’s radar.

Technical Levels: Supports and Resistances

GBPUSD currently trading at 1.2364 at the time of writing. Pair opened at 1.2364 and is trading with a change of 0.00% % .

The pair is trading below its 20 Daily moving average @ 1.251, below its 50 Daily moving average @ 1.2427 , above its 100 Daily moving average @ 1.2281 and above its 200 Daily moving average @ 1.1974

The previous day high was 1.247 while the previous day low was 1.2358. The daily 38.2% Fib levels comes at 1.2401, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.2427, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.2325, 1.2286, 1.2214
• Pivot resistance is noted at 1.2437, 1.2509, 1.2548

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