The GBP/USD pair is seen moving back and forth in a 30-pips narrow range, as the bears consolidate sharp losses incurred on the back of hawkish Fed Yellen’s testimony before the Senate Banking Committee. Yellen noted that it would be appropriate to hike rates in the upcoming months and that every meeting is a ‘live’ one.
The dollar is expected to gain in strength more and more during the course of this week. The reason for the dollar strength to return has been the focus shift of the markets from Trump towards the Fed. In fact, we had expected the markets to focus on the Fed and hence be dollar bullish much earlier but ever since the beginning of the year, the market had been so obsessed with Trump and his policies that it had failed to notice the more important aspect of a strengthening US economy and the rate hikes that were proposed.
GBP/USD Levels to consider
At, 1.2457, the upside barriers are lined up at 1.2483/96 (5-DMA), 1.2528 (20-DMA) and 1.2550 (round figure). While supports are aligned at 1.2417 (100-DMA) and 1.2400 (zero figure) and below that at 1.2379 (50-DMA).
Upcoming Economic Events
Looking ahead to today, we have a host of data from the UK and the US which should keep the traders busy. We have the average earnings and claimant count change data from the UK and the CPI and Retail sales data from the US. We also have part 2 of the Yellen Testimony which should cause a lot of volatility in the markets.