- GBP/USD dropped below the 1.3000-level at the start of the London session.
- Bets on a more aggressive Fed should limit USD losses and restrict the Cable.
- The pound’s demand has been hampered by the UK’s CPI, which is now around 7%.
GBP/USD fundamental forecast
As we are into the London session, GBP/USD is clinging to the 1.3000 level. At the time of writing, the pair is trading at 1.3022.
Bullish recovery
The GBP/USD pair fell below the psychological level of 1.3000 as demand for safe-haven assets increased. However, the GBP/USD pair rebounded more than 50 pips from its low in the early London session and soared to a daily high above 1.3041.
Taking a breather
The USD slipped slightly from a new two-year high on a milder tone around US Treasury note rates, which helped spot prices. Earlier this year, St. Louis Fed President James Bullard predicted that interest rates would reach 3.5% by the end of the fiscal year. This sparked the greenback bulls, who pushed the DXY slightly above 101.00.
Aside from that, evidence of stability in the equities markets weakened the safe-haven greenback even further.
Murky sterling
A rising Consumer Price Index (CPI) report has hurt the pound bulls further. The annual Consumer Price Index (CPI) in the United Kingdom was 7%, higher than the preliminary estimate of 6.7 percent and the prior print of 6.2 percent. This increased the likelihood of the Bank of England raising interest rates for the fourth time.
However, the pound has drawn support from some cross-driven gains arising from a massive surge in the GBP/JPY cross. This was another reason that led to the GBP/USD pair’s little intraday rise.
Key data releases from the UK
We don’t have anything from the UK today. The only two UK releases to watch this week are tomorrow’s retail sales and PMIs and speeches by Bank of England Governor Andrew Bailey and Catherine Mann on Thursday.
Key data releases from the US
Traders in the United States will draw cues from US housing market statistics and anticipated speeches by Fed Charles Evans and James Bullard.
What’s next to watch for GBP/USD?
Today, the USD will be driven by US data, bond rates, global risk sentiment, and potential trade possibilities around the pair. On the other hand, the focus will also be on the Russian-Ukrainian conflict, which can provide a boost to the greenback.
GBP/USD technical analysis: clinging to 1.3000, but for how long?
GBP/USD is now trying to stay above the 1.3000 level. So far, the pair has lost 0.10%. The pair is way below its 100-day moving average on the daily chart, and the RSI is near 40.
GBP/USD is now hitting the 1.3022 level. A fall below 1.2997 will bring the pair towards the 1.2971 support level. If the pair falls below this level again, it will challenge the next support level, 1.2926.
On the upside, the Cable can go towards the next resistance level, around 1.3057. A break over 1.3091 will pave the door for a test of the following resistance level of 1.3116.
