- GBP/USD gained some strong positive traction on Tuesday and reclaimed 1.3600 mark.
- BoE Governor Bailey downplayed negative rate speculations and boosted the sterling.
- Bulls await a sustained move beyond a descending trend-line before placing fresh bets.
The GBP/USD pair built on the previous day’s bounce from the 1.3450 confluence support and gained strong positive traction through the first half of the European session on Tuesday. The mentioned region comprised of 200-period SMA on the 4-hourly chart and the 50% Fibonacci level of the 1.3188-1.3704 positive move.
The latest leg of a sudden spike over the past hour or so came after the Bank of England Governor Andrew Bailey downplayed speculations on negative interest rates. The momentum assisted the GBP/USD pair to reclaim the 1.3600 mark, with bulls now awaiting some follow-through buying beyond a one-week-old descending trend-line.
Meanwhile, technical indicators on the daily chart maintained their bullish bias and have again started gaining positive traction on hourly charts. The set-up supports prospects for additional gains. That said, the ongoing rally in the US Treasury bond yields might underpin the USD and cap the upside for the GBP/USD pair.
Hence, it will be prudent to wait for a sustained breakthrough the trend-line resistance before positioning for any further appreciating move. The GBP/USD pair might then accelerate the positive momentum towards the 1.3665 horizontal zone before making a fresh attempt to conquer the 1.3700 round-figure mark.
On the flip side, any meaningful pullback below the 1.3580 region (23.6% Fibo. level) now seems to find some support ahead of mid-1.3500s. This is followed by the 38.2% Fibo. level support, around the key 1.3500 psychological mark, which if broken decisively could drag the GBP/USD pair back towards the 1.3450 confluence support.
GBP/USD 4-hourly chart
Technical levels to watch