Pound Sterling Update: GBP/USD Uptrend in Focus

Explore the Pound Sterling Update: GBP/USD emerging uptrend driven by USD sell-offs, technical shifts, and upcoming risk events.

The GBP/USD pair is currently hovering around a crucial level, signaling the emergence of a new uptrend. Despite a lack of significant bullish catalysts, the pound is steadily recovering lost ground, marking higher highs and higher lows in contrast to its downtrend in the previous months.

Sell-offs in the USD have primarily driven the recent upward movements in the pair, triggered by deteriorating fundamental data from the most significant global economy. However, following a sharp rise on Tuesday, prompted by better-than-expected US CPI data, the pair has experienced a subsequent decline.

Pound Sterling Update: GBP/USD Uptrend in Focus

A key challenge for further bullish momentum is the 200-day SMA and a daily close above it would indicate a positive outlook for continued upward movement. The technical analysis suggests that GBP/USD is no longer in a downtrend, given the series of higher highs and higher lows. Monitoring potential pushback from Fed officials is essential, as it could be influenced by recent risk-off sentiment, limiting GBP/USD upside. Identify resistance levels at 1.2585, with support levels resting at 1.2345 and 1.2200 flat.

In interest rates, markets in the UK, Europe, and the US no longer anticipate rate hikes and are now leaning towards expectations of rate cuts with high confidence. Compared to the US, which foresees a first cut by June, Sterling could find satisfaction in an anticipated slightly delayed rate cut by August. Later today, expect numerous Fed speakers and the upcoming FOMC minutes to introduce intra-day volatility as key risk events unfold.

 The UK eagerly anticipates Jeremy Hunt’s Autumn Statement, with speculation circulating about potential tax cuts. The recent achievement of halving inflation before year-end and the upcoming general election has intensified this anticipation.

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