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    GBP/USD edges higher amid softer USD, upside potential seems limited

    Source Fxstreet
    Mar 26, 2024 02:24
    • GBP/USD attracts some buyers for the second straight day, albeit lacks bullish conviction.
    • Rising bets for an imminent interest rate cut by the BoE continue to cap gains for the GBP.
    • The Fed’s projected three rate cuts in 2024 keep the USD on the defensive and lend support.

    The GBP/USD pair trades with a mild positive bias during the Asian session on Tuesday, albeit lacks follow-through buying and remains below mid-1.2600s, or the overnight swing high. The fundamental backdrop, meanwhile, favours bearish traders and warrants some caution before positioning for an extension of the recent bounce from the 1.2475 area, or a five-week low touched last Friday.

    The Bank of England (BoE) Governor Andrew Bailey said last week that expectations of interest rate cuts this year were not unreasonable. This comes after two BoE policymakers, who previously voted for higher rates, changed their positions to keep borrowing costs steady at 5.25%, which might continue to undermine the British Pound (GBP). The US Dollar (USD), on the other hand, stalls the previous day's corrective pullback from the vicinity of the monthly peak amid the optimistic outlook for the US economy. This further contributes to capping the upside for the GBP/USD pair.

    Moreover, several Fed officials expressed concern about sticky inflation and stronger-than-expected US macro data. In fact, Atlanta Fed President Raphael Bostic expects the US economy and inflation to slow gradually and anticipates only one rate cut this year. Separately, Chicago Fed President Austan Goolsbee said that the US central bank needs to see progress in inflation and strike a balance with its dual mandate. Meanwhile, Fed Governor Lisa Cook said that there are risks to easing policy too much or too soon as well as too late as the path of disinflation has been bumpy and uneven.

    The Fed, however, had signalled last week that it remains on track to cut interest rates by 75 basis points this year, which acts as a headwind for the US Treasury bond yields. This, along with the underlying bullish tone around the equity markets, might hold back traders from placing aggressive bullish bets around the safe-haven Greenback and lend some support to the GBP/USD pair. Market participants now look to the US economic docket – featuring Durable Goods Orders, the Conference Board's Consumer Confidence Index and the Richmond Manufacturing Index– for a fresh impetus.

    GBP/USD

    Overview
    Today last price 1.2643
    Today Daily Change 0.0006
    Today Daily Change % 0.05
    Today daily open 1.2637
     
    Trends
    Daily SMA20 1.2722
    Daily SMA50 1.268
    Daily SMA100 1.2642
    Daily SMA200 1.2592
     
    Levels
    Previous Daily High 1.2652
    Previous Daily Low 1.2592
    Previous Weekly High 1.2804
    Previous Weekly Low 1.2575
    Previous Monthly High 1.2773
    Previous Monthly Low 1.2518
    Daily Fibonacci 38.2% 1.2629
    Daily Fibonacci 61.8% 1.2615
    Daily Pivot Point S1 1.2602
    Daily Pivot Point S2 1.2567
    Daily Pivot Point S3 1.2541
    Daily Pivot Point R1 1.2662
    Daily Pivot Point R2 1.2688
    Daily Pivot Point R3 1.2723

     

     

    Disclaimer: For information purposes only. Past performance is not indicative of future results.
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