- GBP/USD rises for the second day in a row and hits a new weekly high.
- Bets on a less aggressive Fed rate hike weigh on the dollar and offer support for the pair.
- A better than expected UK PMI supports the GBP and contributes to the positive move.
The GBP/USD pair builds on the previous day’s positive move and gains some traction for the second day in a row on Wednesday. The pair maintains its offered tone throughout the early American session and currently stands near the weekly high, just below 1.1950.
A combination of factors keeps US dollar bulls on the back foot, which, in turn, is seen as a tailwind for GBP/USD. Investors now seem convinced that the US central bank will slow the pace of its rate hike cycle and have been pricing in a higher probability of a relatively minor 50 basis point hike in December. This, coupled with a generally positive tone in equity markets, continues to weigh on the safe haven dollar.
On the other hand, sterling is supported by reports that the British government may pursue a Swiss-style relationship with the European Union. This is due to expectations that the Bank of England will raise interest rates further to control inflation. Furthermore, the UK’s flash PMIs showed that economic activity slowed less than expected in November, which is further propping up the British pound and pushing GBP/USD higher.
Aside from the aforementioned fundamentals, the possibility of some short-term trading stops being triggered if strength holds above the 1.1900 signal provides an additional boost to spot prices. However, the bleak outlook for the UK economy could dampen GBP/USD gains. Traders may also refrain from making aggressive bets and would rather wait for the FOMC minutes to be released later in the US session.
The US published durable goods orders in October, which showed growth of 1% (2.8 billion) in October to 277.4 billion, a figure that was better than the expected rise of 0.4%. Without taking defense into account, the rise was 0.8%, while a fall of 0.1% was expected. Without considering transportation, the advance was 0.5%, and a reading without variations was expected. Initial jobless claims increased by 24,000 in the week ending November 19 to 240,000, above the market consensus of 225,000. This is the highest reading since August and the second-biggest rise in five months.
Technical levels to watch
|Last price today||1.1938|
|Today I change daily||0.0048|
|Today’s daily change in %||0.40|
|today’s daily opening||1,189|
|previous daily high||1.1903|
|previous daily low||1.1814|
|Previous Weekly High||1.2029|
|previous weekly low||1,171|
|Previous Monthly High||1.1646|
|Previous monthly minimum||1.0924|
|Fibonacci daily 38.2%||1.1869|
|Fibonacci 61.8% daily||1.1848|
|Daily Pivot Point S1||1.1835|
|Daily Pivot Point S2||1,178|
|Daily Pivot Point S3||1.1746|
|Daily Pivot Point R1||1.1924|
|Daily Pivot Point R2||1.1958|
|Daily Pivot Point R3||1.2013|
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.