- GBP/USD rises firmly back to the 1.2400 level amid modest USD weakness.
- The formation of a rising channel supports prospects for further gains.
- Investors now await the FOMC decision for further directional momentum.
GBP/USD is moving higher on Wednesday for the fifth day in a row, and approaches the 1.2400 level again during the first half of the European session. However, the pair remains below the five-month highs reached on Tuesday as traders wait for the FOMC decision before opening new positions.
Meanwhile, expectations of a relatively minor Fed rate hike of 50 basis points are keeping the dollar under pressure near its lowest level since late June. Aside from this, positive risk sentiment weighs further on the safe-haven US dollar, which in turn is seen offering some support for GBP/USD. The intraday rise, meanwhile, does not seem to have been affected by the UK consumer inflation figures, which were released earlier in the day.
From a technical point of view, the recent recovery seen since late September constitutes the formation of an ascending channel. This points to a well-established short-term uptrend and supports the prospects for further gains. The constructive outlook is bolstered by the fact that the technical oscillators on the daily chart remain in positive territory and are still far from the overbought zone.
Therefore, further strengthening towards a test of the previous day’s high, around the 1.2440-1.2445 region, looks like a distinct possibility. Momentum could extend further towards the upper end of the aforementioned trend channel, currently around the psychological level of 1.2500. Continuation buying would mark a new bullish break and set the stage for an extension of the current positive momentum.
On the other hand, the daily low around 1.2340 seems to support an immediate drop before the 1.2300 level. A further pullback could continue to attract some buyers near the 1.2250-1.2245 zone. This, in turn, should help limit the decline near the weekly low, around the round 1.2200 level. If these support levels are not defended, the positive outlook will be nullified and the bias will be in favor of the bears.
GBP/USD daily chart
GBP/USD key levels
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.
