Cable Consolidates Above the 1.21 Handle

GBP/USD PRICE, CHARTS AND ANALYSIS:

Most Read: ECB Delivers 50bps Hike Despite Banking Sector Woes, EURUSD Indecisive

GBP/USD FUNDAMENTAL BACKDROP

GBPUSD continued to edge larger in a single day as general market sentiment improved and the US Dollar weakened. Following the Swiss National Bank announcement, yesterday information filtered by way of that main US banks together with CitiBank and JPMorgan agreed a $30 billion Dollar support package deal for distressed lender First Republic Bank. The information additional boosted sentiment and noticed GBPUSD rally from lows round 1.20300 to trade at the 1.2160 deal with (at the time of writing).

Currency Strength Chart: Strongest – NZD, Weakest – USD.

Source: FinancialJuice

Given that the financial docket for subsequent week contains each the Federal Reserve and the Bank of England fee selections any additional upside transfer could also be capped by the weekly excessive round 1.22016. This may imply a continuation of rangebound trade between the 1.2000 and 1.2200 mark for the the rest of the day and the early a part of subsequent week.

According to studies the UK Government has confirmed that it’s making a brand new supply to National Health Services (NHS) employees relating to wage will increase which can embrace a one-off bonus cost which unions declare quantities to GBP2.5 billion. The Unions have stated they’d advocate members settle for the new supply whereas confirming additional strikes have been suspended. Furthermore, it appears the long-awaited finish to the new Brexit deal could lastly be coming to an finish as UK MPs are anticipated to vote on the ‘Windsor framework’ subsequent week Wednesday.

Following the 50bps hike by the European Central Bank (ECB) yesterday we now have seen a knock-on impact, with the likelihood of a fee hike from each the Federal Reserve and the Bank of England (BoE) now showing extra probably. The likelihood for a Fed Rate hike of 25bps subsequent week has jumped from 54% yesterday to 82% as of this morning. Next week’s UK inflation knowledge comes a day earlier than the BoE fee determination and will function a closing information for the Central Bank with a rise in inflation more likely to lead to a fee hike.

Later as we speak we do have the BoE Ipsos Survey at 09:30 UK time which may give additional insights into shopper sentiment in addition to shopper expectations and emotions round inflation. This can be adopted up in the US session by the Preliminary Michigan Consumer Sentiment Release, each occasions may add some extent of volatility however are unlikely to vary the general image for GBPUSD.

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TECHNICAL OUTLOOK

On the each day timeframe worth motion is hinting at additional upside with a brand new larger excessive trying extra probably. Since bottoming out round the 1.1800 deal with on March 8 we now have had a major upside rally with a each day candle shut above the earlier vary excessive of 1.2173. We have had a little bit of retracement earlier than discovering assist yesterday at the 100-day MA whereas printing a bullish inside bar each day candle shut hinting at additional upside. The key check for the pair can be whether or not the weekly excessive of 1.2200 will maintain agency as we speak or whether or not we may probably break larger and convey the 1.2260 resistance stage into play.

Alternatively, a rejection from present worth may see a push again towards the 100-day MA at 1.20400 maintaining the pair inside its weekly vary between the 1.2000 and 1.2200 handles respectively.

GBP/USD Daily Chart – March 17, 2023

Source: TradingView

Written by: Zain Vawda, Markets Writer for DailyFX.com

Contact and comply with Zain on Twitter: @zvawda