GBP/USD Eases to 1.2350 amid USD Demand
29 May 2023
As USD sees renewed demand, GBP/USD eases to 1.2350
The GBP/USD exchange rate is trading close to 1.2350, giving up gains made during European trading hours. Despite the uptick in market sentiment due to optimism surrounding the US debt settlement, the safe-haven US Dollar is seeing renewed demand. Investors are waiting for a new catalyst in a low liquidity environment.
The UK’s Spring Bank vacation and the US’s Memorial Day vacation have kept trade volumes low, and GBP/USD has made a quiet start to the new week. The pair’s short-term technical view indicates that buyers are still holding back, but once the pound stabilizes above 1.2360, a lengthy correction may be seen.
Last week, hawkish Federal Reserve (Fed) wagers helped the US Dollar (USD) gain strength and cost the GBP/USD pair almost 100 pips.
The Fed’s preferred gauge of inflation, the Core Personal Consumption Expenditures (PCE) Price Index, edged up to 4.7% on a yearly basis in April, against the market forecast of 4.6%, according to a report released by the US Bureau of Economic Analysis before the weekend. Additional information from the magazine showed that consumer spending was still strong, increasing by 0.8% monthly.
The probability that the Fed would maintain its policy rate in June has decreased below 40% from over 75% a week ago, according to the CME Group Fed Watch Tool.
Meanwhile, on Sunday, Republican House Speaker Kevin McCarthy and US President Joe Biden agreed to postpone the debt ceiling. When bond markets and US stock index futures resume trading early on Tuesday, should markets turn risk-positive on this event, the USD may struggle to find demand, which would help GBP/USD gain momentum.
GBP/USD TECHNICAL ANALYSIS DAILY CHART:
GBP/USD is trading in the down channel.
GBP/USD is currently trading below all SMA.
RSI is in buying zone which suggests bullishness and Stochastic is suggesting a downtrend.
GBP/USD resistance is at 1.23475 & its immediate support level is 1.23047
HOW TO TRADE GBP/USD
After rising upward, GBP/USD made a small turn and retraced to the downside. Price is currently trying to go upward while trading in a resistance zone; if this zone is broken, then we could expect it to move higher.