- The GBP/USD bounced off daily lows at 1.2446 and reclaimed 1.2500.
- GBP/USD Price Analysis: Bullish above 1.2500, with buyers eyeing the 200-week EMA above 1.2800.
The GBP/USD soared to fresh YTD highs at 1.2583 despite fundamental news from the United States (US) increasing the likelihood of a Federal Reserve 25 bps rate hike. Therefore, the GBP/USD is trading at 1.2571, above its opening price by 0.61%.
GBP/USD Price Action
The GBP/USD daily chart remains upward-biased from a technical perspective. After dipping to the 20-day EMA at 1.2477, the GBP/USD surged past the 1.2500 mark, despite the US Dollar (USD) strengthening after high inflation data.
The Relative Strength Index (RSI) indicator is still in bullish territory and aims higher, justifying higher GBP/USD prices. If GBP/USD cracks the 1.2600 figure, it would be cheered by buyers, which will set their eyes on the 200-week EMA at 1.2817.
Conversely, if the GBP/USD tumbles below 1.2500, that will expose the 20-day EMA at 1.2427, followed by 1.2400. A breach of the latter will expose the 50-day EMA at 1.2315, followed by the 1.2300 figure ahead of the confluence of the 200/100-day EMAs, each at 1.2188/1.2203, respectively.
GBP/USD Daily Chart
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The GBP/USD exchange rate has seen impressive growth this week, as buyers are pressing towards 1.2600. The climb to 11-month highs is evidence of a strong USD, yet currency speculators are more confident in Britain’s economic prospects.
Data from the Bank of England shows that its policies have increased consumer and business confidence in the strength of the British Pound. Inflation levels remain above expectations in the UK, despite an easing of the BOE’s easing measures. This indicates that a healthy domestic demand is present in the nation, which could continue to support the Pound.
On the other hand, the U.S. economy has seen slower growth recently, due to the divergence between strong job market numbers and a lack of corporate and consumer confidence. The mood of the American dollar has been further weakened by the recent lack of fiscal/monetary support from the Federal Reserve.
From a technical perspective, the GBP/USD pair is facing a major resistance at 1.2600. A break above the level could result in a further uptrend, as buyers target a test of the 1.2700 psychological barrier. Conversely, a short-term pullback could result in a fall towards the support of 1.2400.
Overall, the upsurge in the GBP/USD pair is likely to continue as long as there are positive signals from the Bank of England and the Federal Reserve. Additionally, the trend could strengthen if Britain can maintain its current positive economic momentum.