GBP/USD Holds Steady as BoE Policy Outlook Weighs
Updated
The GBP/USD pair maintains a positive trend for the fourth consecutive day, trading around the 1.2535-1.2540 range in the Asian session, just below the highest level since September 9 touched the previous day. The immediate resistance at 1.2550 is seen against GBP/USD before 1.2600 (Fibonacci 50% retracement level from the July-October downtrend) and 1.2670 (static level from August).
On the flip side, the initial support is at 1.2500 (psychological level, static level) before 1.2470, where the Fibonacci 38.2% retracement, the 20-day Simple Moving Average (SMA), and the upper limit of the upward regression channel intersect. Closing below the latter may open up further correction opportunities towards 1.2400 (psychological level, static level). GBP/USD rose above 1.2500 and reached the highest level since early September, nearly 1.2550 on Tuesday. Comments from Bank of England (BoE) policymakers on the policy outlook may influence the pair's action in the near future.
On Monday evening, BoE Governor Andrew Bailey stated that they must monitor signs of persistent inflation that could prompt a return to rate hikes. Bailey reiterated that this policy will need to be restricted "for some time," noting that it is too early to consider rate cuts.
Bailey and other members of the Monetary Policy Committee will testify before the Treasury Committee on Tuesday. If officials continue to try to persuade the market that they do not necessarily have to raise interest rates, the pound may gather strength to resist its major counterparts.
In the U.S. trading session, economic data from the U.S. will present existing home sales data for October, which could cause a significant market reaction. The Federal Reserve (Fed) will release the minutes of the meeting from October 31 to November 1. Given the weak inflation data, which has led the market to begin pricing in the Fed's policy shift next year, announced after that meeting, comments in this publication may be outdated.
Meanwhile, the UK's FTSE 100 index opened lower and was last seen down 0.5%. Similarly, U.S. stock index futures turned positive on a quiet Asian trading session. If safe-haven inflows return to the market later in the day, the U.S. dollar may escape selling pressure and limit GBP/USD's upside.
On the flip side, the initial support is at 1.2500 (psychological level, static level) before 1.2470, where the Fibonacci 38.2% retracement, the 20-day Simple Moving Average (SMA), and the upper limit of the upward regression channel intersect. Closing below the latter may open up further correction opportunities towards 1.2400 (psychological level, static level). GBP/USD rose above 1.2500 and reached the highest level since early September, nearly 1.2550 on Tuesday. Comments from Bank of England (BoE) policymakers on the policy outlook may influence the pair's action in the near future.
On Monday evening, BoE Governor Andrew Bailey stated that they must monitor signs of persistent inflation that could prompt a return to rate hikes. Bailey reiterated that this policy will need to be restricted "for some time," noting that it is too early to consider rate cuts.
Bailey and other members of the Monetary Policy Committee will testify before the Treasury Committee on Tuesday. If officials continue to try to persuade the market that they do not necessarily have to raise interest rates, the pound may gather strength to resist its major counterparts.
In the U.S. trading session, economic data from the U.S. will present existing home sales data for October, which could cause a significant market reaction. The Federal Reserve (Fed) will release the minutes of the meeting from October 31 to November 1. Given the weak inflation data, which has led the market to begin pricing in the Fed's policy shift next year, announced after that meeting, comments in this publication may be outdated.
Meanwhile, the UK's FTSE 100 index opened lower and was last seen down 0.5%. Similarly, U.S. stock index futures turned positive on a quiet Asian trading session. If safe-haven inflows return to the market later in the day, the U.S. dollar may escape selling pressure and limit GBP/USD's upside.
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