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MENAFN- Daily Forex)
For three consecutive trading sessions, the GBP/USD exchange rate has stabilized around and above the 1.3000 psychological resistance. It is confirming the strength of the upward reversal with gains reaching the 1.3011 resistance level, the highest for the currency pair in four months. Its gains are stable at the time of writing this analysis, after the reaction of markets and investors to the US Federal Reserve's announcement to keep US interest rates unchanged as expected.
Will GBP/USD Stabilize Above 1.30 in the Coming Days?
According to Forex market trading and through licensed currency trading companies' platforms, the GBP/USD pair has failed to hold above this key level of 1.30, indicating a drain in the upward trend, as many technical indicators point to an "overbought" state. Furthermore, a significant decline in the coming weeks cannot be ruled out if the Pound Sterling continues to fluctuate around these levels.
In general, those wishing to buy the US dollar should consider placing automatic buy orders at various levels before 1.30 to cover at least half of their exposure. Holding onto a portion of this cash also makes sense, as 1.30 appears likely to eventually decline given current trends. According to currency market experts, "The $1.30 level is a crucial psychological level, and crossing it could lead to a significant upward movement, as happened in August of last year. Currency experts then see the possibility of a move to the highs of 1.3045 and 1.3130, respectively."
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Sterling's gains will react strongly to the Bank of England's announcement today, so be cautious. Its gains may increase, or it may be subject to profit-taking selloffs.
The British pound is cautiously awaiting the Bank of England announcement.
According to Forex market trading, the Pound Sterling (GBP) is trading cautiously as its investors refrain from making any bold bets ahead of the Bank of England's interest rate decision today, Thursday. Like the US Federal Reserve, the Bank of England is also expected to keep its monetary policy unchanged this month, after cutting interest rates following the Monetary Policy Committee meeting in February.
Previously, the Pound investors expected the next rate cut by the Bank to come in May. However, since then, we have seen There are signs of rising inflationary pressures in the UK. If this prompts the Bank to downplay the likelihood of an interest rate cut in May, the pound could rise.
Going into the second half of the week, it seems reasonable to assume that the Bank of England's interest rate decision will be the main catalyst for the pound's exchange rate against the US dollar. However, before the Bank of England announces its policy, the UK will also release its latest jobs data on Thursday morning. Economists expect the UK jobs figures for January to show a stable unemployment rate, with slower wage growth.
Ultimately, a decline in wage growth may weaken the Pound Sterling if it is considered additional pressure on the Bank of England to ease its monetary policy.
EURUSD Chart by TradingViewTechnical Analysis for the GBP/USD pair today:
According to the daily chart performance, the 1.30 psychological resistance will remain an important symbol of bulls' control over the GBP/USD currency pair trend. At the same time, technical indicators will begin to give strong overbought signals if bulls succeed in moving towards the 1.3055 and 1.3140 peaks, respectively. Conversely, and on the same time frame, the 1.2785 support will remain the most important to exit the current upward channel.
The GBP/USD pair will be affected today by the Bank of England's announcement, then the announcement of the US weekly jobless claims reading and the Philadelphia Fed Manufacturing Index reading, in addition to the extent of investors' risk appetite and the performance of global financial markets.
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