- Pound rises against US dollar but retreats versus euro.
- GBP/USD climbs to 1.2900, moving away from weekly lows supported by a weaker US dollar.
- On Wednesday, inflation data in the UK and the US will be released.
The GBP/USD pair recovered on Tuesday from 3-week lows on the back of a weaker US dollar. It peaked at 1.2908 but failed to hold above 1.2900 and pulled back modestly. Near the end of the US session was consolidating daily gains, slightly below 1.2900.
A decline of the US dollar across the board was the primary driver of the move higher. Improvement in risk sentiment and some profit taking hit the greenback. The DXY dropped for the first time after rising during eight trading sessions in-a-row. It pulled back from 97.20 to 96.70.
Sterling rose versus the US dollar but finished lower against the euro. UK PM May spoke at the Parliament and said she expects to present a new motion by February 26. BoE Governor Carney mentioned today that the monetary policy under the scenario of a hard Brexit has no clear direction.
GBP/USD Technical outlook
“The pair posted a lower low and a lower high daily basis, which maintains the dominant downward trend firmly in place. In the 4 hours chart, the recovery is below its 20 SMA and 200 EMA, both converging around 1.2920”, says Valeria Bednarik, Chief Analyst at FXStreet.
According to her, technical indicators have recovered within negative levels, but the RSI is already losing upward momentum around 42, a sign of absent buying conviction. “The 1.2830 level is quite a relevant static support as the pair has several daily lows around it from last January, with a break below it probably resulting in a sustained bearish extension this Wednesday.”