Gbpusd Reclaims The Resistance

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Gbpusd Reclaims The Resistance

Gbp/Usd Reclaims The 1.2700 Handle Ahead Of Bailey

The GBP/USD pair has reclaimed the 1.2700 handle again and turned positive. This development came as the market's sentiment improved, leading to USD selling and buying the GBP.

Furthermore, the main event for the GBP/USD is the testimony of Bailey (Governor of BoE). This will shed much-needed light on what to expect from the central bank's monetary policy.

1.28 Is Next Resistance Level

For now, the trend of GBP/USD is bullish, as it is already sitting comfortably above the 1.27 handle. The following relevant resistance is 1.2750, which also coincides with the middle line of a bullish channel. If the pair manages to close above this one, the next level to watch will be 1.2800, followed by 1.2820.

The other scenario is a break of the 1.2700 support where the 100 SMA is also located. In this case, a revisit to the 1.2650 will be on the card, followed by the next resistance at 1.2600.

As for the UK stock market, the FTSE 100 is a downside. Sy, the US stock futures also give mixed signals, which indicates that the market is exercising caution.

The main highlight for the GBP/USD is the testimony of the BoE governor. He is expected to discuss the issue of high interest rates and how they relate to the financial stability of the UK.

The BoE governor will likely reaffirm & defend the central bank's decision to keep interest rates high. At the December meeting, the BoE kept the interest rates at the same levels amid inflation concerns.

So, if Bailey talks about the prospects of more rate hikes at the testimony, the GBP/USD will take another leg higher. On the US side, the bond yields dictate the USD direction as the markets brace for inflation numbers.

And if Bailey hints at rate cuts during the testimony, it will be cheered by the UK stock market but not so much by the GBP.

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