Ahead of US PCE statistics, GBP/USD is still under pressure below 1.2400.
GBP/USD is maintaining its decline from two-month highs at 1.2423 during the European session and is currently trading below 1.2400. The mixed UK economic statistics and the US Dollar’s recovery are weighing on the pair. The US PCE data are currently the primary focus.
Friday’s Asian session saw the GBP/USD pair reach its best level since late January at 1.2423, but since then, it has reversed course and fallen below 1.2400. The pair is drawing near a crucial support level that is located at 1.2350. Market participants will pay careful attention to the US Personal Consumption Expenditures (PCE) Price Index data. It’s also important to keep in mind that, as month and quarter ends approach, market instability is likely to increase later in the day.
The UK’s Office for National Statistics earlier in the day released data showing that the UK’s Gross Domestic Product (GDP) increased at an annualized rate of 0.6% in the fourth quarter. This figure exceeded the market expectation of 0.4% and came in after the third quarter’s growth of 0.4%. Despite this, the positive UK GDP numbers were not enough to boost the value of the pound.
The UK’s FTSE 100 Index, meanwhile, started unchanged after ending the week’s first four trading days in positive territory. Additionally, US equity index futures remain essentially unchanged for the day, suggesting a cautious market attitude.
The Fed’s favored measure of inflation, Core PCE inflation, is expected to remain constant in February at 4.7% on an annual basis. The Core PCE Price Index is anticipated to rise by 0.4% monthly after rising by 0.6% in January.
The CME Group Fed Watch Tool currently indicates that markets are still undecided regarding the US Federal Reserve’s upcoming rate decision. A higher-than-anticipated monthly Core PCE inflation rate of 0.6% or higher could revive hawkish Fed wagers and lengthen the daily correction in the GBP/USD, and vice versa.
EUR/USD TECHNICAL ANALYSIS DAILY CHART:
- At 1.2350, the lower boundary of the rising trend channel acts as important support. The daily chart’s 20-period Simple Moving Average (SMA) acts as additional support for this level. If the GBP/USD pair breaks through that level and begins to use it as support, it may move on to the psychological levels of 1.2300 and 1.2230.
- Buyers might continue to be interested if 1.2350 holds steady. Resistances are situated at 1.2400 (the middle of the ascending channel), 1.2420 (the multi-month high established on Friday), and 1.2450 in that scenario.
- GBP/USD is currently trading in up channel.
- GBP/USD is currently trading above all SMA.
- RSI is in buying zone which suggests bullishness and Stochastic is suggesting no trend.
- GBP/USD resistance is at 1.24189 & its immediate support level is 1.23433
HOW TO TRADE GBP/USD
GBP/USD is presently trading in an upward channel, it has broken its previous day’s high, and is now at a zone of resistance; if this zone is broken, a further upside to the next resistance is possible.