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GBP/USD bounces off multi-week low, keeps the red below 1.2500 amid stronger USD

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  • Sustained USD buying interest dragged GBP/USD to a near three-week low on Tuesday.
  • A generally weaker risk tone, elevated US Treasury bond yields underpinned the buck.
  • The downside seems limited as traders wait for the crucial US CPI report later this week.

The GBP/USD pair managed to recover a few pips from a near three-week low touched in the last hour and was last seen trading around the 1.2470 region, still down nearly 0.50% for the day.

Despite the fact that the UK Prime Minister Boris Johnson survived a vote of no confidence, the British pound, so far, has struggled to attract buyers and remains at the mercy of the US dollar. A generally softer risk tone, along with the recent strong rally in the US Treasury bond yields, continued acting as a tailwind for the buck and prompted fresh selling around the GBP/USD pair on Tuesday.

The market sentiment remains fragile amid concerns that a more aggressive move by major central banks to constrain inflation could pose challenges to global economic growth. Investors also seem worried that the global supply chain disruption caused by the Russia-Ukraine war would continue to push consumer prices higher and force the Fed to tighten its monetary policy at a faster pace.

This, in turn, lifted the yield on the benchmark 10-year US government bond beyond the 3.0% threshold for the first time in nearly four weeks and offered additional support to the greenback. Hence, the market focus will remain glued to the US CPI report on Friday, which might determine the Fed's policy tightening path and will play a key role in driving the near-term USD price dynamics.

In the meantime, the broader market risk sentiment and the US bond yields might influence the USD amid absent top-tier economic releases. This, in turn, should allow traders to grab short-term opportunities around the GBP/USD pair.

Technical levels to watch

GBP/USD

Overview
Today last price 1.2467
Today Daily Change -0.0065
Today Daily Change % -0.52
Today daily open 1.2532
Trends
Daily SMA20 1.247
Daily SMA50 1.2701
Daily SMA100 1.3042
Daily SMA200 1.3297
Levels
Previous Daily High 1.2578
Previous Daily Low 1.2477
Previous Weekly High 1.266
Previous Weekly Low 1.2458
Previous Monthly High 1.2667
Previous Monthly Low 1.2155
Daily Fibonacci 38.2% 1.2539
Daily Fibonacci 61.8% 1.2515
Daily Pivot Point S1 1.248
Daily Pivot Point S2 1.2428
Daily Pivot Point S3 1.2379
Daily Pivot Point R1 1.2581
Daily Pivot Point R2 1.263
Daily Pivot Point R3 1.2682

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