British Pound weakens amid reviving USD demand; defends 1.3300 ahead of key US data
The GBP/USD pair meets with a fresh supply during the Asian session on Thursday, stalling the previous day's bounce from the 1.3275-1.3270 region, or a nearly two-week low.
The British Pound (GBP) weakened against the US Dollar (USD) on Thursday, as the pair struggled to recover from its previous day's low of 1.3270. The GBP/USD pair settled at the 1.3300 level during the last hour, despite a generally stronger US Dollar. Traders should exercise caution, as the lack of follow-through selling indicates potential resistance.
The USD gained momentum following the post-Federal Reserve Meeting (FOMC) decline, driven by inflation risks from high energy prices and a high probability of another Fed rate hike this year. An 80% chance is assigned by the CME Group's FedWatch Tool that the Fed will raise interest rates again in December. Geopolitical uncertainties in the Middle East, including a letter from US Vice President Joseph R. Biden Jr. to Mohsen Rezaei, Iran's Supreme National Security Council, have also strengthened the USD.
USD bulls may wait for further clues about the Fed's future policy before placing fresh bets. Traders should now focus on the Advance Q3 GDP report and Personal Consumption Expenditures (PCE) Price Index. A mildly bullish near-term outlook exists for the GBP/USD pair above the 100-period Simple Moving Average (SMA) on the 4-hour chart and mid-range Fibonacci support.
Resistance is expected at the 23.6% Fibonacci retracement (1.3352) before the cycle high near 1.3417, while support can be found at the 38.2% retracement (1.3311), 50.0% level (1.3278), and deeper Fibonacci floors (1.3246 and 1.3199).
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