Throughout the European trading session, the GBP/USD combination continued to rise, reaching its highest point in a month at around 1.3832. The pair was up 0.75 percent to 1.3828 at the time of writing. The USD selloff is gaining traction. The strong selling impetus that surrounded the US dollar on Tuesday appears to be driving the pair’s surge.
The greenback is finding it tough to find demand in the absence of significant macroeconomic statistics releases, as the risk-positive trading atmosphere makes it harder. The US Dollar Index closed at 93.55, down 0.42 percent on the day. The September Housing Prices and Construction Permits statistics will be presented in the economic agenda later in the session.
Meanwhile, derivatives on US stock market indexes are up 0.35 percent to 0.45 percent, indicating that risk movements will likely dominate the financial system in the afternoon. On the other hand, rising Bank of England rate increase forecasts before Wednesday’s September UK inflation data is enabling the Pound sterling to outshine its peers.
Description Of The Technical Aspects
GBP/USD CHART Source: Tradingview.com
GBP/USD is still trading inside the upward regression range established in late September. The duo is currently challenging the top limit of this band, and the Relative Strength Index (RSI) signal on the four-hour chart is hovering around 70, indicating that a fundamental pullback could occur before any further gains.
In the last instance the RSI rose over 70, on October 15, GBP/USD reversed near the upward channel’s centerline. This line is currently placed at 1.3760, establishing the early support there just before 1.3730 (20-period SMA, lower band line) and 1.3700. (psychological level, 200-period SMA). On the upswing, the first barrier before 1.3850 (stationary level, psychological level) might be observed at 1.3800 (static level).
Overview of The Basics
The GBP/USD combination finished higher for the fourth day in a row on Monday and continued to rise into Tuesday’s European trading hours. In the absence of any Brexit-related news, the Pound sterling outpaced its peers. GBP/USD was a bit below 1.3800. Governor Andrew Bailey of the Bank of England stated over the weekend that they must act to control inflation.
The 2-year UK bond yield increased by over 20% daily, indicating the effect of this remark on rate rise forecasts. The CME Firm’s BoEWatch Tool now forecasts a 52.2 percent likelihood of a 25 basis point rate increase by year’s end and a 17.9 percent possibility of a 50 basis point increase. The BoE’s goal rate remaining unaltered is currently 29.9%.
The wide-ranging selloff around the Dollar is helping GBP/USD on Tuesday. The US Dollar Index is currently approaching 93.60, under pressure from a 1% drop in the benchmark 10-year US Treasury bond yield. The Greenback may struggle to attract buyers if risk movements continue to control the stock markets later in the day.