- A dramatic dollar reversal from a 20-year high prompts some short-covering around GBP/USD.
- Dovish expectations from the Fed, rising US bond yields and a risk-off mood should limit dollar losses.
- The gloomy economic outlook for the UK suggests that the recovery attempt is likely to be short-lived.
The pair GBP/USD it has bounced from the 1.1650-1.1645 zone, its lowest level since March 2020, reached this Monday. The pair makes a new daily high during the first North American session, although it lacks follow-through and currently sits just above 1.1700.
The sharp reversal of the US dollar from a new 20-year high is seen as a key factor that prompted some intraday short covering around the GBP/USD pair. In the absence of a fundamental catalyst, the dollar’s pullback could be attributed solely to profit-taking and is more likely to remain muted amid Fed expectations.
Bets were bolstered by Fed Chairman Jerome Powell’s remarks on Friday that interest rates would stay higher longer to reduce inflation. In fact, markets are currently pricing in a higher probability of a 75 basis point Fed rate hike in September. This is reinforced by a further rise in US Treasury yields.
Aside from this, the prevailing risk environment – as evidenced by the generally weaker tone in equity markets – supports the prospect of some haven dollar buying. This, coupled with the gloomy outlook for the UK economy, warrants some caution before confirming that GBP/USD has bottomed out.
The backdrop seems to continue to lean heavily in favor of bearish traders, suggesting that any subsequent rally could be seen as a selling opportunity and is at risk of fading quickly. Market attention now turns to the release of the monthly US employment report, popularly known as the NFP, on Friday.
Technical levels
GBP/USD
Panorama | |
---|---|
Last Price Today | 1.1714 |
Today’s Daily Change | -0.0025 |
Today’s Daily Change % | -0.21 |
Today’s Daily Opening | 1.1739 |
Trends | |
---|---|
20 Daily SMA | 1.2022 |
50 Daily SMA | 1.2049 |
100 Daily SMA | 1.2305 |
200 Daily SMA | 1.2835 |
levels | |
---|---|
Previous Daily High | 1.19 |
Previous Daily Minimum | 1.1733 |
Previous Maximum Weekly | 1.19 |
Previous Weekly Minimum | 1.1717 |
Monthly Prior Maximum | 1.2246 |
Previous Monthly Minimum | 1,176 |
Daily Fibonacci 38.2% | 1.1797 |
Daily Fibonacci 61.8% | 1.1837 |
Daily Pivot Point S1 | 1.1682 |
Daily Pivot Point S2 | 1.1624 |
Daily Pivot Point S3 | 1.1515 |
Daily Pivot Point R1 | 1.1849 |
Daily Pivot Point R2 | 1.1958 |
Daily Pivot Point R3 | 1.2016 |
Source: Fx Street

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