- The British pound gained momentum during the US session which reached new highs against the USD and the EUR.
- GBP / USD is moving towards the highest daily close in a week.
GBP / USD passed the end of the US session and posted a new six-day high at 1.2296. It then retreated modestly and by the end of the session it was hovering around 1.2265 / 70, almost two hundred pips above Monday’s bottom.
A weaker US dollar was the main driver of the GBP / USD recovery. On Tuesday, the pound gained against the greenback, but not as much as other currencies. MUFG Bank analysts said the relatively disappointing performance of the pound was again fueled by further speculation about the prospect of negative rates in the UK. “We are still not convinced, however, that negative rates will be applied in the UK when there is room for other policy options such as extending the QE. The increased uncertainty should remain a burden for the pound. “
Improved risk sentiment and better-than-expected UK employment data for March helped the pound. Inflation data is expected in the United Kingdom on Wednesday while the key event in the United States will be the FOMC minutes of the last meeting. Fed Powell’s testimony before a Senate committee had no impact.
Short term levels
From a technical point of view, the positive momentum remains in place. The next resistance is observed around the 1.2300 zone followed by 1.2340 and 1.2350 (20-day moving average). On the other hand, support could be located at 1.2255, 1.2215 / 20 (session low in the United States) and 1.2180 (May 19 low).