- GBP / USD regained positive traction on Monday and recovered some of the losses from the previous session.
- The rally was sponsored by some strength driven by the crossover coming from a drop in the EUR / GBP crossover.
- A good recovery in USD demand could limit the upside near the confluence resistance of 1.3710-15.
The pair GBP/USD it attracted some buying on the dips on the first day of a new trading week and rallied over 50 pips from the daily lows, around the 1.3660-55 zone. This pushed the pair above 1.3700, although the bulls struggled to capitalize on the move.
The intraday rally lacked an obvious fundamental catalyst and was solely sponsored by some force driven by the crossover coming from a sharp decline in the EUR / GBP crossover. That said, the emergence of some buying around the US dollar kept any further gains for GBP / USD limited.
The prospects for an early rate hike by the Fed continued to prop up the USD, which received additional wings thanks to a new boost in US Treasury yields. The 10-year benchmark shot past the 1.50% level for the first time since June.
The USD maintained its offered tone near month-highs after posting mostly better-than-expected US durable goods orders for August. General orders increased 1.8% in August and orders excluding transportation items posted a modest 0.2% growth during the reported month.
From a technical perspective, the positive move stalled just before the 200 hourly SMA, around the 1.3710-15 region. The aforementioned area coincides with the 23.6% Fibonacci level of the BoE-inspired rally from 1.3600 and should now act as a key point for traders.
Meanwhile, the oscillators on the hourly charts have been gaining some positive traction, but have yet to confirm a bullish bias on the daily chart. This makes it more prudent to wait for a sustained move past the 1.3710-15 confluence hurdle before positioning for further gains.
This is followed by swinging highs after the BoE, around 1.3750, above which the GBP / USD is likely to accelerate the move and aim to regain the 1.3800 level. The next relevant resistance is pegged near the 1.3835-40 region ahead of the 1.3870-75 supply zone.
On the other hand, the oscillating daily lows, around the 1.3660-55 region, now appear to protect the immediate drop. A convincing break below could spark some technical selling and make GBP / USD vulnerable to falling and challenging the 1.3600 mark, or monthly lows.
1 hour chart
Technical levels
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