- GBP/USD manages to reverse some of the recent sell-off.
- BOE’s C.Mann sees upside risks to the inflation outlook.
- The UK construction PMI improved slightly in January.
The pound sterling manages to recover to some extent from the current strength of the dollar and motivates the GBP/USD to bounce from initial lows near 1.2020 on Monday.
GBP/USD seems to have support near 1.2020
GBP/USD smiles back, pulling back from a previous slide to fresh 5-week lows in the 1.2025/20 band earlier in the week.
Indeed, the pound manages to muster some bullish traction despite persistent buying interest in the USD, which has already driven the USD Index (DXY) to fresh 4-week highs well above the 103.00 barrier.
On the UK agenda, C.Mann, a member of the Bank of England’s Monetary Policy Committee, said he sees upside risks to the inflation outlook, while adding that the consequences of undertightening far outweigh the alternative.
In terms of data, new car sales grew 14.7% in the year to January and the S&P Global/CIPS Construction PMI fell marginally to 48.4 in the same month (from 48.8).
What to watch out for in the British pound
Like the rest of the risk complex, the British pound is expected to follow the dollar price action and the policy divergence between the Federal Reserve and the Bank of England regarding the near-term direction of the cable.
Furthermore, the gloomy outlook for the UK economy in the coming months, coupled with high inflation, somewhat dampens the prospects for further gains in the pound sterling in the short term, while a Bank of England close to its terminal rate also does not seem beneficial for the currency.
technical levels
At time of writing, the pair is up 0.02% at 1.2052 and a break of 1.2174 (55-day SMA) would open the door to 1.2447 (23 Jan 2023 high) and then 1.2666 (weekly high). May 27, 2022). On the other hand, the next support emerges at 1.1950 (200-day SMA) followed by 1.1841 (Jan 6 low) and finally 1.1807 (100-day SMA).
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.
