- GBP/USD posts solid gains for the week of 1.19%.
- BoE Governor Bailey said a 50 basis point rate hike is on the table at the next meeting.
- GBP/USD Price Analysis: Bullish pressure if buyers retake 50 DMA, followed by 1.2400; otherwise, downside risks remain.
The GBP/USD rose during the American session, extending its rise to three consecutive days after falling around 3.50% for the month, although the major trimmed some of its losses, thanks to a good report on employment in the United Kingdom, a risk on impulse, and also because BoE Governor Andrew Bailey declared that 50 basis points will be on the table for the next meeting.
GBP/USD opened near 1.1940 before falling to daily lows around 1.1920. However, the factors mentioned above lifted the pair towards its daily high at 1.2040 before pulling back to current price levels. At the time of writing, the GBP/USD pair is trading at 1.2004, up 0.46%.
GBP/USD rises on positive UK data and US dollar weakness
Global equities are capitalizing on risk appetite. GBP/USD was buoyed by the greenback, which continues to weigh, as shown by the US dollar index, which stumbles at 107,000, down 0.73%. US Treasuries followed suit, with the 10-year US Treasury yield breaking the 3% threshold, signaling that US bond sellers are in control.
On Tuesday, Bank of England Governor Andrew Bailey said a 50 basis point rate hike would be among the options, while commenting that the Bank of England’s Monetary Policy Committee (MPC) will start discussing a strategy. sale of gilts in the portfolio of the Asset Purchase Mechanism (APF).
Meanwhile, during the European session, UK employment data was released. The Office for National Statistics (ONS) reported that 296,000 new jobs were added to the British economy, exceeding expectations. At the same time, the unemployment rate remained stable at around 3.8% year-on-year in the three-month average. Median earnings, including bonuses, increased less than estimated.
On the other hand, the US economic docket included housing starts in June, which fell 2% month-on-month, showing signs of softening caused by the Federal Reserve’s aggressive tightening. Building permits were next down 0.6% in their June reading,
What to do
In the coming week, the UK economic docket will include inflation readings, specifically the consumer, producer and retail price indices. In the US, the calendar will be light, with the release of existing home sales, which are expected to contract, in line with housing starts and building permits.
GBP/USD Price Analysis: Technical Outlook
GBP/USD remains biased to the downside, despite rallying to a fresh 2-week high. Daily Moving Averages (DMAs) holding above the exchange rate, coupled with an exchange rate below the June 16 high of 1.2406, will keep the major currency vulnerable to selling pressure.
If GBP/USD buyers wanted to regain control, they would need to recapture the 50-day moving average (DMA) at 1.2266 to challenge the June 16 daily high at 1.2406. On the other hand, the first GBP/USD support would be 1.2000. If it breaks below, the July 18 low at 1.1925 will be seen, followed by a test of the 1.1900 figure.
Source: Fx Street
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