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GBP/USD pulls back and consolidates around 1.2230 after mixed UK data and USD strength

  • GBP/USD will end the week with gains of around 0.40%.
  • Federal Reserve officials kept their commitment to rein in inflation to their 2% target.
  • Mixed economic data in the UK, a headwind for GBP/USD, despite expectations of a Fed rate cut in 2023.

He GBP/USD it ended the week lower, after reaching a weekly high of 1,234, but eased back as sentiment moderated. On Friday, GBP/USD is trading at 1.2228, down 0.47% at time of writing.

Fed policymakers gear up to fight inflation, UK data paints a bleak economic picture

The US stock market is preparing to end the week in positive territory despite a new round of turmoil. Deutsche Bank shares fell sharply on fears that the German bank will go into receivership, as shown by the 220 basis point rise in Credit Default Swaps (CDS). Although it hurt Wall Street at the opening of the session, investors shrugged off those fears, speculating that the Federal Reserve (Fed) would cut rates in 2023.

Federal Reserve officials made statements. St. Louis Fed President James Bullard said rates need to get to the 5.50-5.75% range, which would require an additional 75 basis points of rate hikes after the Fed has raised rates to 4.75%. -5.00% Earlier, his colleague Raphael Bostic of the Atlanta Fed said the March decision was not an easy one: “There was a lot of debate. It was not an easy decision.”

Richmond Fed President Thomas Barkin commented that the situation in the banking sector “looked very stable when we got there (at the meeting). So the conditions were right to do monetary policy the way we want to do monetary policy.”

Regarding the data, in the US economic calendar, the improvement of the Global S&P PMI in March stood out, exceeding expectations and data from the previous month. The manufacturing index remained in contractive territory. At the same time, durable goods orders fell 1%, but improved from the previous month.

On the British economic agenda, Retail Sales stood out, beating estimates in annual and monthly terms, while the S&P global PMIs were worse than expected. The manufacturing PMI did not improve, while the services and composite PMIs registered slight falls.

Catheryn Mann, a member of the Bank of England, said she had voted for a 25 basis point rate hike rather than a larger one because she saw signs that inflation expectations are falling.

GBP/USD Technical Analysis

GBP/USD Daily chart

Against this backdrop, GBP/USD extended its losses, buoyed by a stronger US dollar. Although GBP/USD hit a daily low at 1.2190, buyers could break through 1.2200. It has to be said that failure to get a daily close above 1.2300 could exacerbate a fall below 1.2200, which could extend to the 20 day EMA around 1.2135. Once broken, the 200 day EMA would be in play. On the other hand, buyers recapturing 1.2300 may pave the way to the weekly high of 1.2343.

GBP/USD

Overview
Last price today 1.2232
daily change today -0.0056
today’s daily change -0.46
today’s daily opening 1.2288
Trends
daily SMA20 1.2071
daily SMA50 1.2148
daily SMA100 1.2084
daily SMA200 1.1893
levels
previous daily high 1.2344
previous daily low 1.2262
Previous Weekly High 1.2204
previous weekly low 1,201
Previous Monthly High 1.2402
Previous monthly minimum 1.1915
Fibonacci daily 38.2 1.2312
Fibonacci 61.8% daily 1.2293
Daily Pivot Point S1 1.2252
Daily Pivot Point S2 1.2216
Daily Pivot Point S3 1,217
Daily Pivot Point R1 1.2334
Daily Pivot Point R2 1.2379
Daily Pivot Point R3 1.2415

Source: Fx Street

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