GBP/USD Jumps Above 1.2850 As Risk Sentiment Improves
At the moment, the GBP/USD pair is enjoying bullish momentum and is now en route towards the 1.2800 level after crossing the 1.2850 resistance. The positive risk mood followed by the rising US stocks has helped the pair to gain upside today.
In addition, the upcoming Fed's interest rate decision is also putting a cap on the US Dollar advance. This is also helping the GBP to gain the upper hand against the greenback.
GBP/USD Buyers Remain Hesitant
The GBP/USD 4-hr chart reveals an interesting technical reading if we look at the RSI indicator. Initially, the indicator made a recovery and touched the 50 line only to retreat back to the 40 level. This is an indication that despite the US Dollar's weakness in the near term, the bulls of the GBP/USD are still hesitant to go all in.
The nearest important resistance for the GBP/USD is the 1.2800 level, where the 200 SMA is also present. So if the GBP/USD closes below that level, the next probable stop for the bears will be 1.2750, followed by 1.2730.
On the upside, the 1.2870 level is proving itself to be a strong resistance, and it will be difficult to cross in the current circumstances. But if the bulls manage to convert it into support, then the next stop for the GBP bulls will be 1.2900 and then the 1.2930 level.
During Tuesday's early trading sessions, the GBP/USD managed to touch 1.2870, only to lose momentum afterwards. So if we look at this price action, then the 1.2800 could be the level where we will see a major sell-off in the pair.
Elsewhere, optimism regarding the Chinese stimulus package is rising, which is making it difficult for the greenback to find ample demand. That's yet another reason why the GBP/USD has managed to make a comeback from its 7-day losing streak.
Looking ahead, GBP/USD will be strongly impacted by the upcoming Fed meeting. In fact, the FOMC meeting will set the tone for the Pound/Dollar pair and will tell us what's going to happen next.