Tuesday, March 28, 2023

GBP/USD finds support near 1.2100, narrowing intraday deficit on weak US GDP.

  • GBP/USD is defending the 1.2100 level and preventing its intraday pullback from a one-month low.
  • A technical crunch in the US forces the dollar to cut some of its gains and provides some support.
  • Britain’s political uncertainty about Brexit warrants some caution before making aggressive bullish bets.

couple GBP/USD It finds some support near 1.2100 and halts its intraday pullback from the 1.2200 area, or hit a nearly one-month high earlier this Thursday. The pair recovered a few pips during the opening US session after the US GDP flash report was released.

The world’s largest economy contracted at an annual rate of 0.9% during the April-June period, according to the first estimate released by the US Bureau of Economic Analysis. The reading is worse than the 0.4% growth estimate and confirms a technical slowdown after a 1.6% contraction in the previous quarter. The US dollar cuts off some of the gains from the intraday rally, which in turn helps the GBP/USD pair to bounce back towards the 1.2150 area.

The data, however, added to growing market concerns about a global economic slowdown and continues to sway investor sentiment. This is evidenced by a generally weak tone around US equity futures, which, coupled with a rally in US Treasury yields, could support the Haven dollar. Therefore, it would be wise to wait for the strength to hold above 1.2200 before positioning for any GBP/USD price move.

On the other hand, the downward trend is likely to subside, at least for the time being, in view of the Bank of England increasing bets on a 50 basis point rate hike in its next 2020 monetary policy meeting in August. The mixed environment amid UK political uncertainty and the Brexit crisis offers some caution for aggressive traders.

technical level

Nation World News Desk
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