ST-37 City, Mwali, Fomboni Moheli Comoros Union.
ST-37 City, Mwali, Fomboni Moheli Comoros Union.
Feb 27
2024
GBP/USD is keeping its range trade intact below 1.2700 early Tuesday. A softer US Dollar and a cautious market mood are contributing to the bull-bear tug-of-war, as traders await the speeches from the BoE and the Fed policymakers alongside the US macro news.
GBP/USD tested 1.2700 several times in the past week but failed to clear this level. If the pair rises above this hurdle and starts using it as support, technical buyers could take action. In this scenario, 1.2760 (static level) could be seen as the next bullish target before 1.2800 (psychological level, static level). Meanwhile, the Relative Strength Index (RSI) indicator stays near 60 and the pair trades comfortably above the 200-period Simple Moving Average (SMA) on the 4-hour chart and the ascending trend line, highlighting a buildup of bullish momentum.
On the downside, 1.2660-1.2650 (200-period SMA, ascending trend line, Fibonnaci 23.6% retracement of the long-term uptrend) forms key support area. In case GBP/USD returns below that level, 1.2620 (100-period SMA) and 1.2600 (psychological level, static level) could be seen as net support levels.
GBP/USD extended its winning streak into a fifth consecutive day on Monday. The pair trades within a touching distance of 1.2700 early Tuesday and buyers could remain interested once this level is confirmed as support.
The US Dollar (USD) struggled to find demand on Monday as Wall Street's main indexes held resilient following the previous week's risk rally. US stock index futures trade flat in the European session on Tuesday, pointing to a neutral risk mood.
In the second half of the day, January Durable Goods Orders data from the US will be looked upon for fresh impetus.
After staying unchanged in December, Durable Goods Orders are expected to decline by 4.8%. The CME FedWatch Tool shows that markets are pricing in a nearly 85% probability of the Federal Reserve (Fed) leaving the policy rate unchanged at 5.25%-5.5% at the next two policy meetings. A significant decline in this data is unlikely to revive expectations for a policy pivot in May but the knee-jerk reaction could weigh on the USD and help GBP/USD stretch higher.
Investors will also pay close attention to the risk perception in the American session. In case US stocks open in positive territory, the USD could stay on the back foot. On the other hand, a negative shift in risk mood could support the USD and cap GBP/USD's upside.