Key Points: -
· The GBP/USD pair is consolidating its recent advances, reaching a multi-week high and fluctuating within a specific range on Monday.
· The GBP remains supported by expectations of additional rate hikes from the Bank of England (BoE), which in turn provides stability to the pair.
· Traders are currently displaying hesitation in placing aggressive wagers ahead of significant data and event risks scheduled for this week.
Today's Scenario: -
The GBP/USD pair begins the new week with a subdued start, consolidating its recent gains that reached a one-month high on Friday. Spot prices are trading around the 1.2575-1.2580 range, remaining relatively unchanged during the Asian session as traders await significant macro data and a key central bank event before making new directional decisions.
Meanwhile, the anticipation of additional interest rate hikes by the Bank of England (BoE) acts as a favorable factor for the British Pound and continues to support the GBP/USD pair. Market sentiment suggests that the BoE will take a more aggressive approach in tightening policies to address persistent inflationary pressures, with another 25 bps increase expected on June 22. On the other hand, the US Dollar remains slightly above the monthly low reached last Thursday amid uncertainties regarding the Federal Reserve's rate hike trajectory.
Recent dovish remarks from several Fed officials have reinforced market expectations of the central bank pausing its year-long cycle of rate hikes in June. Nevertheless, there are still expectations of a 25 bps increase in July. These expectations were bolstered by surprise rate hikes from the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) last week, indicating that the fight against inflation is ongoing and supporting the possibility of further tightening measures by the US central bank.
Therefore, the market's attention will be firmly fixed on the outcome of the highly-anticipated two-day FOMC monetary policy meeting on Wednesday. Investors will also closely monitor the release of important UK monthly employment data and the latest US consumer inflation figures on Tuesday. Additionally, concerns about a global economic slowdown may limit market optimism, reinforcing the safe-haven status of the Greenback and restraining bullish activity around the GBP/USD pair.
Diagram of GBP/USD: -
Economic Events: -
Date Event Impact Currency
4:15 (New Zealand) Electronic Retail Card Spending YoY Low NZD
4:15 (New Zealand) Electronic Retail Card Spending MoM Low NZD
5:20 (Japan) PPI YoY Low JPY
5:20 (Japan) PPI MoM Low JPY
5:31 (Ireland) Construction PMI Low EUR
10:30 (Finland) Current Account Low EUR
11:30 (Japan) Machine Tool Orders YoY Low JPY
12:30 (Slovakia) Construction Output YoY Low EUR
13:30 (China) Total Social Financing Low CNY
13:30 (China) New Yuan Loans Low CNY
13:30 (China) M2 Money Supply YoY Low CNY
13:30 (China) Outstanding Loan Growth YoY Low CNY
13:30 (Switzerland) Myfxbook USDCHF Sentiment Medium CHF
13:30 (Australia) Myfxbook AUDUSD Sentiment Medium AUD
13:30 (Japan) Myfxbook USDJPY Sentiment Medium JPY
13:30 (European Union) Myfxbook EURUSD Sentiment Medium EUR
13:30 (United Kingdom) Myfxbook GBPUSD Sentiment Medium GBP
13:30 (Canada) Myfxbook USDCAD Sentiment Medium CAD
13:30 (New Zealand) Myfxbook NZDUSD Sentiment Medium NZD
15:15 (European Union) EU Bond Auction Low EUR
15:15 (European Union) 15-Year Bond Auction Low EUR
18:30 (Ecuador) Balance of Trade Low USD
18:30 (France) 3-Month BTF Auction Low EUR
18:30 (France) 12-Month BTF Auction Low EUR
18:30 (France) 6-Month BTF Auction Low EUR
20:30 (Kosovo) Inflation Rate YoY Low EUR
20:30 (United States) Consumer Inflation Expectations Low USD
21:00 (United States) 6-Month Bill Auction Low USD
21:00 (United States) 3-Year Note Auction Low USD
22:30 (United States) 3-Month Bill Auction Low USD
22:30 (United States) 10-Year Note Auction Low USD
23:30 (United States) Monthly Budget Statement Medium USD
Buy Scenario: -
In GBP/USD a successful breakout above the aforementioned horizontal resistance area around 1.2580-85 would require confirmation by surpassing the psychological level of 1.2600 to convince GBP/USD bulls.
If that occurs, it is likely to see a rise towards surpassing the previous monthly high of 1.2680 without significant hesitation. Till we do not advise to buy GBP/USD.
Sell Scenario: -
The GBP/USD pair remains near the intraday low, experiencing its first daily decline in four days during early Monday in Europe. Currently, it is slightly bearish around 1.2570. Despite the pair's rise in the past two consecutive weeks due to a weakened US Dollar, concerns over the UK's economic well-being and market positioning for upcoming key data and events have weighed on the Pound Sterling.
From a technical standpoint, the Cable pair is facing a horizontal range that has been in place since late April, around 1.2580-85, along with an overbought RSI (14) indicator, indicating a preference for further weakness. Additionally, the MACD indicator is signaling a potential bearish crossover, adding to the downside bias.
As a result, it is likely that the GBP/USD quote will continue its recent decline towards a horizontal support zone that has been in play for about a month, around 1.2540-35. If the bearish momentum persists, the 200-SMA level near 1.2480 could pose a challenge for GBP/USD bears.
In the event that the Pound Sterling pair remains weak below 1.2535, there is a possibility of a further slump towards the previous monthly low of approximately 1.2310. Till then we do not advise selling GBP/USD.
Support and Resistance Level: -
Support and Resistance Level: -
S1 1.2546 - R1 1.2602
S2 1.2512 - R2 1.2624
S3 1.2490 - R3 1.2658