As the US Dollar Index (DXY) has lost positive momentum. After printing a high of 102.75 in the early European session. GBPUSD is gaining strength for a recovery move from near the 1.2450 support. After breaking through the immediate barrier of 1.2480, the Cable is projected to gain strength.
After a little gloomy Friday, S&P500 futures have gained nominal gains in the Asian session. Indicating a revival in market players’ risk appetite. The appeal of risk-perceived assets has strengthened. As investors shift their emphasis to consolidating views of a halt in the Federal Reserve’s (Fed) policy-tightening regime.
The Pound Sterling is expected to stay active ahead of the release of the United Kingdom’s Employment statistics, which is slated for tomorrow. A key factor for the UK labor market’s tight labor market circumstances has been a labor shortage.
The US debt-ceiling discussions are still an important event.
Following the cancellation of Friday’s debt-ceiling talks, US President Joe Biden and Republican House of Representatives Joseph McCarthy are scheduled to meet again on Tuesday. The former wants to raise the Federal borrowing cap but not at the expense of the President’s initiatives, while the latter is willing to endorse a debt-ceiling increase provided US President Joe Biden agrees to curb expenditure projects to decrease the budget deficit.
The Congressional Budget Office warned on Friday that the US faced a “significant risk” of defaulting on payment commitments within the first two weeks of June if nothing was done. lifting the government’s $31.4 trillion debt cap, but added that payment operations will be unclear until the end of May.
Furthermore, the IMF has cautioned that a US default would have “serious repercussions” for the US economy.
GBPUSD Technical Outlook
On a four-hour basis, GBPUSD has fallen below the Rising Channel chart pattern. The Cable is approaching a tipping point, therefore extreme volatility is expected.
The 20-period Exponential Moving Average (EMA) around 1.2516 has proven to be a formidable barrier for Pound Sterling bulls.
The Relative Strength Index (RSI) (14) is swinging between 20.00 and 40.00, indicating further weakening ahead.
