The GBPUSD currency pair has embarked on a notable trajectory, marking four consecutive days of gains after an initial sharp decline at the year’s onset.
This rebound has steered the pair toward a modest year-to-date gain, fuelled by indicators spotlighting the UK’s resilient economic standing. Recent data, notably the S&P Global Composite PMI, depicting a rise to 52.1 in December from 50.7 the month prior, underscores the UK’s economic resilience, predominantly propelled by a robust services sector. This ascent above the 50 mark, indicating expansionary progress, serves as a testament to the UK economy’s strength, consequently bolstering the British Pound.
The divergent monetary policies between the Bank of England, steadfast in its hawkish stance, and the anticipated rate cuts in the US have further bolstered the Pound’s allure, driven by prospects of potentially higher yields in the long run. As market focus intensifies on the imminent US inflation data, its implications on the Fed’s rate policies are poised to add a layer of clarity to the GBPUSD’s future trajectory.
Technical
The GBPUSD currency pair navigates a bullish trajectory, comfortably positioned above the 100-day moving average while adhering to an ascending channel pattern.
The year’s outset witnessed a sell-off, paving the way for a resistance level around 1.28280. As the pair approached the lower boundary of the ascending channel, oversold RSI conditions emerged, signalling a reversal. Consequently, a rebound ensued, carving a notable support level at 1.25936.
Presently, buyer dominance prevails, hinting at a potential retesting of the 1.28280 resistance if the current upward momentum endures. However, a shift in sentiment might pivot the focus towards the downside, potentially eyeing the 100-day moving average as a plausible short-term point of interest should bearish momentum gain strength.
Summary
The GBPUSD’s resilient ascent, fuelled by the UK’s economic strengths and divergent monetary policies, sets a compelling stage. The impending US inflation data looms large, potentially steering the pair amid shifting market sentiments and Fed rate policy implications.
Sources: CME, Reuters, CNBC, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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