GBP/USD: Will it sustain the 3-day rebound on Fed minutes?
The bulls failed once again near 1.3225 region in the Asian trades, sending GBP/USD pair back into the red zone near 1.32 handle, while markets eagerly await the release of the FOMC Sept meeting minutes for the next direction.
GBP/USD near 10-DMA at 1.3198
The spot has run into fresh supply last minutes on the back of a pick-up in broad based US dollar buying, as Treasury yields rally across the curve amid expectations of a hawkish FOMC minutes, which would seal a Dec Fed rate hike.
Despite, the renewed weakness, the sentiment around the pound remains underpinned amid bullish fundamentals and optimistic comments on the EU post-Brexit partnership from the UK PM May, delivered during her speech before the Parliament on Monday.
The UK macro news released yesterday continue to provide the much-needed impetus to the GBP bulls, after it struck monthly lows of 1.3027 last Friday. The UK BRC retail sales came in much better-than expected, while the UK industrial figures also impressed the GBP markets.
More so, as cited by Reuters, money markets are already pricing in more than 75% chance of a hike at the November inflation report, while some strategists believe that markets are not taking into account political risks and are focusing too much on possible rate hikes. Rising expectations of a Nov BOE rate hike are also key factors behind the latest upsurge in Cable.
Focus now shifts towards Fed minutes, which will also throw fresh light on the US interest rates outlook and resultant monetary policy divergence between both the UK and US. On the data-front, the UK docket remains empty, while the US offers the JOLTS job openings.
GBP/USD Technical View
Valeria Bednarik, Chief Analyst at FXStreet noted: “Technical indicators have lost their upward strength, but hold within bullish territory, overall favoring an upward movement ahead. The pair has a major dynamic resistance in the way, the 200 EMA at 1.3230, and gains beyond it will likely keep the Pound afloat for the rest of this Wednesday. Support levels: 1.3170 1.3130 1.3090 Resistance levels: 1.3230 1.3260 1.3300.”