GBPUSD bounces off a key support target
The GBPUSD experienced a decline today, breaking below the 100-hour moving average (MA) at 1.22608 for the first time since March 17th. The pair’s downward trajectory brought it to a significant swing area between 1.2191 and 1.22028, with the rising 200-hour MA currently situated at 1.21952 – within that swing area. Although the day’s low dipped slightly below the swing area to 1.21895, a subsequent bounce saw buyers regain ground, pushing the price back up to around 1.2230. The pair is currently trading at 1.2223.
With the swing area and 200-hour MA providing support, their importance in determining market sentiment increases. Remaining above this level indicates a bullish outlook, while falling below could see traders eyeing Tuesday’s low at 1.21778 and the 38.2% retracement level near 1.21362. On the upside, a break above the 100-hour MA at 1.22608 and sustained trading above this level, followed by a move past 1.2283, could signal a push toward yesterday’s swing highs.
In the backdrop, the Bank of England announced a 25 basis point rate hike yesterday, with BOE Governor Bailey maintaining a neutral stance on rate expectations. He stated that it’s uncertain whether the current target of 4.25% would be the terminal rate. Meanwhile, this week’s CPI inflation unexpectedly rose to 10.4% from 9.9%. The central bank anticipates a sharp decline in the future, but whether this expectation will be met and further rate increases can be avoided remains unclear. Today, retail sales were much stronger than expected throwing a monkey wrench into the idea that growth would begin to slow. Sales increased by 1.2% versus a 0.2% expected. Last month increased by 0.7%
The financial markets’ ongoing concerns and uncertainties continue to exert influence on the GBPUSD.