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GBP/USD falls to daily lows near 1.2235 after hitting 1.5-week highs at 1.2332

  • GBP/USD rose to a 10-day high on Monday amid modest dollar weakness.
  • The expectations of the Bank of England and the Brexit problems acted as a headwind and limited the rises.
  • Investors are now waiting for US economic data to find short-term opportunities.

The GBP/USD gained traction in the early hours of Monday and soared to a 1-1/2 week high by European morning at 1.2332. However, the pair failed to capitalize on the move or find acceptance above 1.2300 and has dropped over 90 pips to make a daily low at 1.2238. At time of writing, the cross is trading above 1.2240, shedding 0.24% daily.

The recent drop in commodity prices appears to have eased concerns over persistently rising inflation and forced investors to downgrade expectations of more aggressive monetary policy tightening by the Federal Reserve. Aside from this, a nice recovery in risk sentiment globally – as evidenced by a generally positive tone around equity markets – undermined the safe-haven US dollar. This, in turn, was seen as a key factor offering some support to the GBP/USD pair, although the rally lacks bullish conviction.

Weaker UK macro data has raised concerns about UK economic growth and fueled recession fears. This, coupled with expectations that the Bank of England will opt for a more gradual approach to raising interest rates, has held back traders from placing aggressively bullish bets on sterling. Additionally, the deadlock between the UK and the EU over the Northern Ireland protocol to the Brexit deal has helped limit GBP/USD gains, at least for now.

Therefore, it will be prudent to wait for strong buying beyond last week’s high around the 1.2325 region before positioning for further gains. The outcome of the macroeconomic data, coupled with US bond yields and general market risk sentiment, could influence USD price dynamics and produce short-term trading opportunities around the GBP/USD pair.

Technical levels

GBP/USD

Panorama
Last Price Today 1,226
Today’s Daily Change -0.0009
Today’s Daily Change % -0.07
Today’s Daily Opening 1.2269
Trends
20 Daily SMA 1.2375
50 Daily SMA 1.2482
100 Daily SMA 1.2872
200 Daily SMA 1.3191
levels
Previous Daily High 1,232
Previous Daily Minimum 1.2241
Previous Maximum Weekly 1.2324
Previous Weekly Minimum 1.2161
Monthly Prior Maximum 1.2667
Previous Monthly Minimum 1.2155
Daily Fibonacci 38.2% 1,229
Daily Fibonacci 61.8% 1.2271
Daily Pivot Point S1 1.2233
Daily Pivot Point S2 1.2197
Daily Pivot Point S3 1.2154
Daily Pivot Point R1 1.2313
Daily Pivot Point R2 1.2357
Daily Pivot Point R3 1.2393

Source: Fx Street

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