GBP-USD technical analysis pair
2022.12.16 07:48
GBP-USD technical analysis pair
Budrigannews.com – The following decisions from the Federal Reserve, the European Central Bank, and the Bank of England, the experienced a sharp drop on Thursday, primarily as a result of a stronger at critical times for currency markets.
Despite high inflation, the Federal Reserve, the and the all increased key interest rates by 50 basis points as anticipated. There were no unexpected outcomes. Chair Powell’s somewhat hawkish tone at the Fed, combined with the macroeconomic projections, appeared to indicate that higher interest rates would persist for a longer period of time than previously anticipated.
The dollar initially dropped, but during Powell’s remarks, it reversed course and increased. Added to the appreciation on Thursday was a general aversion to risk across financial markets. In times of monetary tightening, concerns about the global growth outlook caused the indexes on Main Wall Street to drop by more than 2%.
In the UK, these concerns about growth are more prevalent. Two members of the Monetary Policy Committee at the Bank of England voted against raising interest rates due to the outlook. Seven other members voted in favor of a raise. GBP was affected by the surprise of two votes in favor of “no change.” After the meeting of the European Central Bank, the pound lost more ground.
Thursday’s economic data from the United States were mixed. The PMIs, which mark the beginning of December’s activity, will be released on Friday around the world. Poor readings may encourage people to avoid taking risks, favoring the dollar over the pound.
The GBP/USD uptrend is still on, but it has lost momentum. Thursday’s reversal is the first sign of a potential top around 1.2450. The mentioned area capped the upside during the last three trading days. The decline extended to 1.2156, slightly above the 20 and 200-day Simple Moving Average. A consolidation below 1.2100 should point to more losses in the short term.
GBP/USD needs to break above the 1.2320 area to recover bullish strength. Such a scenario would again expose the critical resistance at 1.2450. A daily close above this last level could anticipate the resumption of the rally.
