GBPUSD rose to 1.2500 on Wednesday before falling to 1.2450 early Thursday. The near-term technical view implies that the pair must convert 1.2480 into support in order to advance further.
Expectations from the Bank of England may help the Pound Sterling keep its position.
Rising UK gilt yields helped the Pound Sterling hold its ground versus its key competitors on Wednesday. The interest-rate sensitive two-year gilt yield increased by more than 2% to 4.6%, reaching its highest level since September. When former British Prime Minister Liz Truss”mini-budget’ prompted a gilt selloff.
This week’s unexpected rate rises by the Reserve Bank of Australia (RBA), and the Bank of Canada (BoC) reminded. Investors are sceptical about major central banks’ resolve to maintain restrictive monetary policies. In the face of sustained global inflationary pressures.
The 2-year UK gilt yield is down about 1% on the day during European trading hours on Thursday. Making it harder for GBPUSD to gain positive momentum. Furthermore, the UK’s FTSE 100 Index remains negative, restricting the potential gains of the risk-sensitive Pound Sterling.
The US Department of Labor will report weekly Initial Jobless Claims figures, which are expected to increase slightly to 232,000 from 230,000. A number above 250,000 might strengthen GBPUSD if the Federal Reserve keeps its policy rate steady at its forthcoming policy meeting. A drop towards 200,000, on the other hand, should allow the US Dollar (USD) to recover. to outperform its competitors. However, ahead of next Tuesday’s crucial Consumer Price Index (CPI) readings, investors are likely to avoid from taking significant positions based only on this data.
GBPUSD Technical Outlook
GBPUSD is safely above the rising trend line, and the four-hour chart’s 50-period Simple Moving Average (SMA) completed a bullish cross with the 100-period SMA. Furthermore, the Relative Strength Index (RSI) indicator is moving closer to 60, supporting the bullish bias.
On the upside, 1.2480 (200-period SMA, Fibonacci 50% retracement of the most recent downturn) is a powerful resistance level.
Despite rising above that level twice in the previous 24 hours, GBPUSD has yet to settle there. Once confirmed as support, 1.2500 (psychological level) aligns as an intermediate obstacle ahead of 1.2520. (61.8% Fibonacci retracement) and 1.2550 (static level).
The first level of support is around 1.2440 (former resistance, Fibonacci 38.2% retracement), followed by 1.2420 (ascending trend line, 100-period SMA). A four-hour close below the latter may entice sellers, dragging the pair below 1.2400 (psychological threshold) and 1.2360 (static level).
