GBPUSD: 200-SMA, monthly support test bears post-Fed
, it's too early to say that the pair has gone into a recovery phase with the Relative Strength Index indicator staying below 50.
On the downside, 1.3460 aligns as first support ahead of 1.3410 . Resistances are located at 1.3530 and 1.3580 .GBP/USD has snapped a three-day losing streak on Tuesday and closed modestly higher near 1.3500, around which it continues to move sideways early Wednesday. The slight improvement witnessed in risk mood seems to be allowing the British pound to find some demand but the pair remains at the mercy of the dollar's market valuation.
The Fed is expected to signal a 25 basis points rate hike in March amid rising price pressures but market participants will want to know more about the possible timing of balance sheet reduction. If FOMC Chairman Jerome Powell notes that they could start shrinking the balance sheet in the second half of the year instead of "toward the end of the year" this could have a bullish impact on the dollar and weigh on GBP/USD. On the other hand, Powell might adopt a cautious tone on policy tightening due to heightened fears about a global economic slowdown and cause the dollar to face renewed selling pressure. In that case, GBP/USD should extend its rebound, at least in the near term.
Meanwhile, senior civil servant Sue Gray's report on British Prime Minister Boris Johnson's lockdown parties is yet to come to light. On a concerning note, Scotland Yard has announced that they have launched a formal criminal investigation into eight events, during which lockdown rules were violated.Interested in weekly GBPUSD forecasts? Our experts make weekly updates forecasting the next possible moves of the pound-dollar pair.
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