GBP/USD hits a two-week high but retraces towards the figure at 1.2000
- GBP/USD is recording solid gains in the week of 1.19%.
- BoE’s Governor Bailey said that 50 bps rate hikes are on the table in the next meeting.
- GBP/USD Price Analysis: Upside pressure if buyers reclaim the 50-DMA, followed by 1.2400; otherwise, downside risks remain.
The GBPUSD grinds higher during the New York session, extending its rally to three straight days after falling close to 3.50% during the month, though the major trimmed some of its losses, thanks to a goodish UK employment report, a risk on impulse, and also to BoE’s Governor Andrew Bailey stating that 50 bps will be on the table for the next meeting.
The GBP/USD opened near 1.1940s before sliding to the daily lows around 1.1920. However, the factors abovementioned lifted the pair towards its daily high at 1.2040 before retreating to current price levels. At the time of writing, the GBP/USD is trading at 1.2004, up 0.46%.
GBP/USD rises on upbeat UK data and a weaker US dollar
Global equities are taking advantage of risk appetite. The GBP/USD got boosted by the greenback, which remains heavy, as depicted by the US Dollar Index, stumbling below the 107.000 mark, down by 0.73%. US Treasuries followed suit, with the US 10-year Treasury yield rising above the 3% threshold, signaling that US bond sellers are in control.
On Tuesday, the Bank of England Governor Andrew Bailey said that a 50 bps rate increase would be among the choices while also commenting that the BoE Monetary Policy Committee (MPC) will begin to discuss a strategy to sell gilts in the Asset Purchase Facility (APF) portfolio.
In the meantime, during the European session, UK employment data was released. The Office for National Statistics (ONS) reported that 296K new jobs were added to the UK economy, exceeding expectations. At the same time, the Unemployment rate remained steady at around 3.8% YoY in the three-month average. Average earnings, including bonuses, rose less than estimated.
Elsewhere, the US economic docket featured June’s US Housing starts, which dropped 2% MoM showing signs of softening caused by an aggressive tightening of the Federal Reserve. Following suit was Building Permits, which shrank by 0.6% on its June reading,
What to watch
In the week ahead, the UK economic docket will feature inflation readings, namely consumer, producer, and retail price indices. On the US front, the calendar will be light, with the release of Existing Home Sales expected to contract, in line with Housing Starts and Building Permits.
GBP/USD Price Analysis: Technical outlook
The GBP/USD remains downward biased, despite recording a leg-up towards a fresh two-week high. The daily moving averages (DMAs) staying above the exchange rate, alongside an exchange rate below June 16 high at 1.2406, will keep the major vulnerable to selling pressure.
If GBP/USD buyers would like to regain control, they would need to reclaim the 50-day moving average (DMA) at 1.2266 to challenge the June 16 daily high at 1.2406. On the flip side, the GBP/USD first support would be 1.2000. Break below will expose the July 18 swing low at 1.1925, followed by a test of the 1.1900 figure.
