According to recent Forex market trades, the exchange rate of the pound sterling against the dollar “GBP/USD” broke the 1.27 resistance level for the first time since September. Meanwhile, it appears that the pound sterling is in the overbought zone from a technical standpoint. Recently, GBP/USD gains extended to the 1.2732 resistance level, the highest resistance level for the currency pair in three months, and the currency pair’s gains increased. Furthermore, after a major sell-off in the US dollar following comments from a senior member of the US Federal Reserve. Clearly, the exchange rate has since pared its advance to fall below 1.27 as the market looks to catch its breath after four days of big gains.
Expectations for the GBP/USD in the coming days:
In this regard, “The US dollar’s decline has accelerated,” says Charalambos Pisouros, chief investment analyst at XM.com. adding, “This time it was Fed Governor Chris Waller who pushed the US currency off the cliff as the usually hawkish policy maker took a surprise turn and said that if low inflation continued for several more months, they could start cutting the interest rate.” Finally, the analyst added that this was the first time that a Federal Reserve official discussed the possibility of a cut.
Generally, we have seen foreign exchange markets (Forex) prove particularly responsive to any mention of interest rate cuts by global central bank governors. An example was given earlier this month when the pound fell after Bank of England chief economist Hugh Bell appeared to dismiss market bets on interest rate cuts starting in the summer of 2024. Analysts added to Waller's comments: “Investors may think... “If one well-known hawk is now considering rate cuts, some other members may be more keen to hit the cut button sometime during the first half of the year.”
Waller has urged market participants to add more to their bets, as the 25-basis point cut is now fully priced in for Ma
GBPUSD Expectations and Analysis Today:
The rise in the GBP/USD exchange rate has now reached extreme proportions, according to the daily Relative Strength Index (RSI). Nearby, the Relative Strength Index is now above the critical 70 level. Thus, a move above the 70 level indicates overbought, and we expect the RSI to return to the 30-70 range as a consolidation or rebound in the GBP exchange rate develops. Overall, the rally has been fast and furious over the past few days, and now may be the time to see some calm to allow the market to readjust with profit taking, especially as we approach the end of the month.
The occurrence of selling operations for the British dollar may first collide with the support levels 1.2610, 1.2545 and 1.2490, respectively. Shortly, GBP/USD will be affected today by the announcement of the US Federal Reserve's preferred inflation reading and the number of weekly jobless claims.
