The GBP/USD trading pair has managed to continue on the path of recovery, and it has gone over 1.3500. Despite the fact that it remained on an upward trajectory in the early trading hours of Wednesday, analysts say it may be difficult for it to keep attracting heavy investments unless it tackles the major resistance level that appears to have developed at 1.3560.
GBP/USD price chart . Source:TradingView
The Benefit of the Dollar
The general trading pressure that has been around the US dollar and the risk sentiments that have got better have both been behind the progress of the pair since the week started.
The monitoring US Dollar Index is doing quite badly after it has lost over 1% of its value this week even though it reached its strongest point in almost 19 straight months to achieve 97.44 at the close of trading last week. The recent statements coming from the Federal Reserve officials calmed worries concerning a 50 bps rate increase in March and made the dollar lose interest.
The risk sentiments continued to be prevalent in the money market on Wednesday, which further puts pressure on the US dollar.
In the United Kingdom, the S&P 500 futures have risen by 0.2%, while the FTSE 100 index, on the other hand, rose by 0.5%, indicating that the market is on the upside in today’s trading so far.
The US ADP Employment Change data for January is expected later in the day. Analysts and market players are looking forward to it for new directions and momentum. The effect of the Employment Change data on the GBP/USD pair is possible to be a short one as the Bank of England is expected to announce a decision on interest rates after its meeting on Thursday while the American jobs report comes up a day after, on Friday.
A stiff resistance has been formed at 1.3560 by the 100-day SMA on the four hour’s chart and the Fibo. retracement at 50%. The 20-day SMA is likewise building up that level. In the event of the GBP/USD pair rising over the obstacle and using it as a support, it may target up to 1.3600.
The RSI signal on the four hour’s chart remains within the 70 distance, indicating that the duo may need a corrective measure ahead of the next leg.
On the downward side, 1.3500, 200-day SMA Fibo. retracement of 38.2% converged to be the initial support before reaching 1.3460 Fibo. retracement of 23.6%.