- GBP / USD is moving higher on Thursday, although it lacks continuation beyond the 1.3500 level.
- Rising expectations for an imminent rate hike from the BoE benefits the British pound and supports the pair’s upward move.
- Optimistic expectations from the Fed act as a tailwind for the USD, limiting gains amid Brexit troubles.
The pair GBP/USD moves with a positive bias during the first half of the European session on Thursday, with the bulls making a fresh attempt to harness the momentum beyond the key psychological level of 1.3500.
The pair has built on the upward move following the release of warmer than expected UK CPI data yesterday, around 100 pips from below the 1.3400 level, and gained some continuation traction on Thursday. This marked the third consecutive day of positive movement, also the fourth in the previous five, and was supported by rising expectations of an imminent interest rate hike by the Bank of England in December.
Secondly, declining US Treasury yields forced the DXY US dollar index back from a 16-month high played the day before. This was seen as another factor that acted as a tailwind for the GBP / USD pair. That said, the possibility of the UK government suspending part of the Brexit deal on Northern Ireland prevented bulls in the pair from opening aggressive positions.
Apart of this, post-Brexit fishing rights impasse further contributed to limiting gains for GBP / USD, At least for the moment. This makes it prudent to wait for sustained strength above the 1.3500 level before investors begin to position themselves for an extension of the recent recovery move from the yearly lows around 1.3350 touched last Friday.
In the absence of major UK economic releases, Brexit related news will play a key role in swaying sentiment around the British pound. On the other hand, at the beginning of the American session, investors will take indications from the macroeconomic publications of the United States, with the Philadelphia Fed manufacturing index and the initial weekly unemployment claims.
Aside from this, US bond yields, broader market risk sentiment and a timed speech by New York Fed Chairman John Williams could boost demand around the dollar. This, in turn, should provide some momentum to the GBP / USD pair and generate some trading opportunities.
GBP / USD technical levels
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