British Pound Finds Support, Fed Speakers Expected to Drive Market Sentiment
In terms of economic data, the UK calendar is relatively quiet until February 13, when official employment figures for December will be released.
NEWS
2/6/20241 min read
British Pound Finds Support, Fed Speakers Expected to Drive Market Sentiment
POUND STERLING UPDATE:
Revised Fed Expectations Push GBP/USD to One-Month Lows
A crucial technical support level has held off further declines
Can it hold firm? GBP/USD saw a slight rebound against the US Dollar on Tuesday, following two tough days for Sterling. However, the Greenback remains dominant, dictating the direction for this currency pair and others.
The near-complete dismissal of a March interest rate cut by the Federal Reserve, prompted by last week's robust labor market report, continues to bolster the Dollar. Meanwhile, uncertainty lingers on the Pound's side, with the Bank of England divided on future monetary policy. With two members advocating for a rate hike, five opting for no change, and one pushing for a cut, the BoE's stance remains murky, marking the first three-way split since 2016.
Looking ahead, GBP/USD is likely to be influenced by statements from various Fed officials, with four scheduled to speak in the near term. Market participants will closely scrutinize their remarks for clues on the timing of potential rate cuts, particularly with speculation mounting for a May cut.
In terms of economic data, the UK calendar is relatively quiet until February 13, when official employment figures for December will be released.
TECHNICAL ANALYSIS: GBP/USD
Sterling has been ousted from its recent trading range, which had persisted since December. However, the lower boundary of this range, serving as the first Fibonacci retracement level from the October 5 lows to the December 28 peak, has provided notable support. Monday's precise intraday low of 1.25180 aligns with this level, suggesting a significant bounce.
Additionally, the Pound slipped below its 200-day moving average, signaling potential oversold conditions. Bulls will aim to reclaim this level, with psychological resistance at 1.2600 and the December 7 closing high of 1.25927 posing key barriers.
Nevertheless, the primary focus for bulls in the short term will be to maintain Sterling above the critical retracement level on both daily and weekly closing bases.