GBPUSD remains stable over 1.2700.
GBPUSD fell and ended a four-day winning streak on Tuesday, driven by a bearish change in risk sentiment. The pair remains above 1.2700 early Wednesday, although the technical picture does not yet indicate a buildup of recovery momentum.
The US Dollar (USD) strengthened on Tuesday as safe-haven flows dominated financial market activity in the American afternoon. Investors are anxious that a protracted conflict in the Middle East could drive up energy costs, making it impossible for central banks to control inflation. .
Early Wednesday, the UK’s FTSE 100 Index trades slightly down, while US stock index futures remain neutral, implying that markets will remain cautious during the week.
Governor Bailey of the Bank of England will appear before the Treasury Committee.
Later in the American session, Governor Andrew Bailey of the Bank of England (BoE) would testify before the Treasury Select Committee. Bailey will reply to questions about the threat that rising interest rates represent to financial stability. Bailey will almost certainly defend the choice to tighten policy in order to combat inflation. Following the BoE’s decision to keep the policy rate steady in December, Bailey stated that interest rates have not peaked. If Bailey leaves the door open to further rate hikes, GBPUSD could rise further.
Later in the day, the 10-year US Treasury note auction will also take place. In If the high-yield falls to or below 4%, the 10-year US yield may fall and impact on the USD.
GBPUSD Technical Outlook
The GBPUSD pair rose after finding support near 1.2700. On the upside, the next resistance level is 1.2750 (the midpoint of the ascending regression channel). Once the pair has stabilized above this level, 1.2800 (psychological level, static level) might be set as the next bullish goal ahead of 1.2820 (end-point of the most recent upswing).
Technical sellers may take action if GBPUSD falls below 1.2700 (100-period Simple Movig Average (SMA), psychological level) and begins to use this level as resistance.
In this case, 1.2660-1.2650 (200-period SMA, Fibonacci 23.6% retracement of the most recent rise) could be the next level of support.
