GBP/USD Trades Near 1.3100 As US Dollar Shows Weakness
In the European trading session, the GBP/USD pair was trading near the 1.3100 level as the US Dollar is struggling to find its direction. The USD remains weak despite the cautious market approach, which tells us that the chances of the Fed changing its course have increased manifolds.
Looking ahead, the Bank of England is likely to stick with the rate hikes, while the Fed is likely to move away from this policy. So from a fundamental point of view, the GBP/USD is poised for bullish momentum in the near term.
GBP/USD: 1.3150 And 1.3200 Are Important Resistance Levels
The GBP/USD is trading inside an ascending regression channel in which the nearest support level is 1.3100. So if the Pound/Dollar pair closes below 1.3100 on a 4-hr chart, the correction will likely extend to 1.3060. That's the mid-level of the ascending channel and will likely allow the indicators to move away from overbought conditions.
If the mid-level of the regression channel is pierced, then the GBP sell-off will extend and then lead the pair toward the 1.3120 level.
If we look on the flip side, the nearest resistance for the GBP/USD pair is present at 1.3150, followed by 1.3200 and 1.3260.
Despite the short-term selling in the GBP/USD, the pair continues with its bullish momentum and even gained 150 days during Thursday's session. That makes it the 6th day in a row that the GBP bulls have kept the pair in bullish territory.
The US Dollar (USD) remains under selling pressure after the UBLS data showed a 0.1% increase in the PPI which is a sign of a slowdown in inflation. Although this is good for the US economy and the stock market, it would make the USD weaker against its peers, like the GBP.
Meanwhile, the chair of the OBR recently talked about how inflation has become deeply embedded in the economy and will require more action from the BoE.