Introduction:
The GBP/USD pair has been on an upward trend for the third successive day, supported by a combination of factors. The upbeat UK monthly GDP data released on Friday has boosted the British Pound, while the US Dollar remains weak amid reduced bets for a jumbo 50 bps lift-off at the March FOMC meeting. In this article, we will delve deeper into the factors that have contributed to the recent gains in the GBP/USD pair.
Factors behind GBP/USD gains:
The GBP/USD pair has bounced back from its lowest level since November 2022, with spot prices reaching a three-day high during the first half of the European session on Friday. The upbeat UK monthly GDP data has played a significant role in boosting the British Pound. The economy expanded by 0.3% in January, surpassing market expectations for a growth of 0.1%. This sharp rebound from the 0.5% contraction recorded in December has bolstered investor confidence in the UK economy, thereby supporting the GBP/USD pair.
Meanwhile, the US Dollar remains on the defensive amid reduced bets for a jumbo 50 bps lift-off at the March FOMC meeting. This has lent additional support to the GBP/USD pair. However, the mixed technical setup calls for caution among bullish traders ahead of the key US NFP report.
Technical analysis:
From a technical perspective, the GBP/USD pair has a mixed setup, which warrants some caution for bullish traders. While the recent gains have been encouraging, the pair needs to sustain strength beyond the psychological mark of 1.2000 before fresh bets can be placed. The key US NFP report due next week is also likely to have an impact on the pair’s momentum.
Conclusion:
The GBP/USD pair has gained momentum for the third successive day, supported by a combination of factors. The upbeat UK monthly GDP data has bolstered investor confidence in the UK economy, while the US Dollar remains on the defensive amid reduced bets for a jumbo 50 bps lift-off at the March FOMC meeting. However, the mixed technical setup calls for caution among bullish traders ahead of the key US NFP report. Overall, the GBP/USD pair’s performance in the coming days will be closely watched by traders and investors.
