GBP/USD pares part of intraday gains, remains above 1.2000 amid USD weakness

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  • GBP/USD regains positive traction on Tuesday amid fresh selling around the dollar.
  • Less hawkish Fed hike expectations continue to weigh on the USD amid a risk positive tone.
  • A bleak outlook for the UK economy is acting as a headwind for the pound and limiting the pair’s gains.

The pair GBP/USD it attracts new buying on Tuesday and reverses a significant portion of the previous day’s decline to a three-day low. However, the pair is back a few points from the daily high hit during the first half of the European session and is currently trading just above the psychological level of 1.2000.

A combination of factors causes fresh selling around the US dollar, which in turn causes GBP/USD to receive some support. Global risk sentiment gets a small boost after Chinese authorities hinted the possibility of relaxing COVID-19 restrictions, despite the increase in cases across the country. This follows from signs of stability in the stock markets and weighs on the safe-haven dollar. Also, expectations that the Fed will slow the pace of its tightening put additional downward pressure on the dollar.

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In fact, the minutes of the November Federal Open Market Committee (FOMC) meeting, released last week, cemented market expectations in favor of a relatively minor rate hike of 50 basis points in December. This leads to a further decline in US Treasury yields and continues to weigh on the dollar. The pound sterling, for its part, is supported by rising expectations for further substantial rate hikes from the Bank of England. Nevertheless, the bleak outlook for the UK economy is acting as a headwind for sterling and limiting any significant movement GBP/USD appreciation, at least for now.

No major UK macroeconomic data will be released on Tuesday, while the Conference Board’s Consumer Confidence Index will be released on the US economic calendar. In addition, speeches by Catherine Mann, a member of the Bank of England’s Monetary Policy Committee, and Andrew Bailey, Governor of the Bank of England, will serve as encouragement. Traders will also take note of broader risk sentiment, which could weigh on the dollar and create short-term opportunities around GBP/USD.

Technical levels to watch

GBP/USD

Overview
Last price today 1.2023
Today I change daily 0.0075
Today’s daily change in % 0.63
today’s daily opening 1.1948
Trends
daily SMA20 1,173
daily SMA50 1.1428
daily SMA100 1.1645
daily SMA200 1.2176
levels
previous daily high 1.2118
previous daily low 1.1941
Previous Weekly High 1.2154
previous weekly low 1.1779
Previous Monthly High 1.1646
Previous monthly minimum 1.0924
Daily Fibonacci of 38.2%. 1.2009
Fibonacci 61.8% daily 1,205
Daily Pivot Point S1 1.1887
Daily Pivot Point S2 1.1825
Daily Pivot Point S3 1.1709
Daily Pivot Point R1 1.2064
Daily Pivot Point R2 1,218
Daily Pivot Point R3 1.2242

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Source: Fx Street

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