Daily Price Outlook
The GBP/USD is currently trading around 1.2067. Following a sell-off triggered by reports of internal issues at Credit Suisse, the pair attempted a rebound move.
Federal Reserve Rate Hike Bets Lose Steam Amid Falling US Inflation and Credit Suisse Crisis
In the US, concerns about the potential harm caused by the Federal Reserve's aggressive rate hike cycle have grown following the collapse of Silicon Valley Bank (SVB), and bets on rate increases have been muted due to a decrease in inflation to 6%, which was in line with expectations. Market participants now expect the central bank to exercise caution regarding potential hikes, and the CME Group FedWatch Tool shows an 82% chance of a 25 basis point interest rate increase.
Furthermore, disappointing US retail sales and lower Producer Price Index (PPI) numbers suggest a noticeable decline in US inflation, which has significantly reduced hawkish Federal Reserve (Fed) bets.
As a result, the US Dollar Index (DXY) has corrected following the decline in hawkish bets and is currently trading at 104.64, while the US 10-year treasury bond is trading at 3.496%. The GBP/USD currency pair's decline has been limited by the weakening dollar.
UK Chancellor Hunt presents significant tax and benefit reforms in the Spring Budget
Meanwhile, in the United Kingdom, Chancellor of the Exchequer Jeremy Hunt announced significant reforms to the UK tax and benefit system to encourage firms to invest, attract individuals to return to work, and boost the economy out of stagnation.
In addition, Credit Suisse's biggest investor declared it was unable to offer the Swiss bank any more financial support, which prompted the CEO of the Swiss bank to provide new guarantees concerning the stability of the institution's finances. According to the Telegraph, Bank of England (BoE) officials were discussing the possible impact of the issues at Credit Suisse, a systemically important firm linked with the global financial system.
Worries about the European banking system were reinforced by unfortunate news from Swiss lender Credit Suisse, and investors' risk-off sentiment is still on the rise as a result. Therefore, the United Kingdom's Finance Minister (FM) Jeremy Hunt failed to support the British Pound with the financial budget, putting pressure on GBP/USD.
GBP/USD Intraday Technical Levels
Pivot Point: 1.2086
GBP/USD – Technical Outlook
The GBP/USD pair made an attempt to break the minor support level at 1.2060, but it consolidated above it, keeping the possibility of resuming the bullish trend on an intraday basis. The next main target is expected to be at 1.2260.
Stochastic is providing clear positive signals, supporting the expectation of a rise in the upcoming sessions. Breaking 1.2145 would make it easier to achieve the anticipated positive targets.
It is important to note that breaking 1.2060 would push the price to decline and test the most significant support at 1.1940 before any new positive attempts.
The expected trading range for today is between 1.2000 support and 1.2160 resistance.
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