The GBP/USD pair has seen some volatility during the first half of the European session, as it reversed an intraday dip to sub-1.2400 levels and turned positive. However, the pair currently lacks follow-through, with its gains remaining limited.
At the time of writing, the GBP/USD pair trades around the 1.2420-1.2425 region, up less than 0.10% on the day. This follows a three-day losing streak, which the pair has managed to snap for the time being.
Factors Affecting the GBP/USD Pair
Several factors are impacting the movement of the GBP/USD pair, including economic data releases, central bank policies, and geopolitical developments.
In recent days, the UK economy has shown signs of weakness, with retail sales dropping more than expected in February, and inflation remaining below the Bank of England’s target. These factors have put pressure on the pound, as traders speculate on the possibility of further monetary policy easing.
Meanwhile, the US dollar has also faced challenges, with the Federal Reserve maintaining its dovish stance and indicating that interest rates will remain low for the foreseeable future. However, the ongoing COVID-19 pandemic and political tensions are keeping traders cautious, as they look for direction in the markets.
Looking Ahead for the GBP/USD Pair
As traders continue to monitor economic data releases and central bank policies, the GBP/USD pair is likely to remain volatile. Key events to watch out for include the Bank of England’s monetary policy meeting later this month, as well as any developments in Brexit negotiations and the COVID-19 pandemic.
In the short term, the GBP/USD pair may face some resistance around the 1.2440-1.2450 levels, while support is expected at the 1.2380-1.2400 region. Traders should also keep an eye on the US dollar index, which is trading near its lowest levels since March 2021.
Conclusion
The GBP/USD pair has rebounded from its intraday dip to sub-1.2400 levels, but its gains remain limited for now. Traders will continue to monitor economic data releases and central bank policies, as they look for direction in the markets. In the short term, the pair may face some resistance around the 1.2440-1.2450 levels, while support is expected at the 1.2380-1.2400 region.
