GBP/USD: Supply capping minor-recovery at hourly 200-SMA

The GBP/USD pair is seen struggling in the red zone, with the recovery unable to gain traction as the US dollar hovers near multi-year peaks versus its main rivals, as markets continue to digest the Fed minutes.

GBP/USD testing lows near 5 & 50-DMA confluence at 1.2423

The cable extends its weakness into the Asian session this Thursday as the Nov Fed meeting minutes combined with upbeat US economic data reinforced market’s belief that a Dec Fed rate hike is a done deal, sending the US treasury yields through the roof, eventually boosting the sentiment around the greenback.

Moreover, the UK Budget Statement released yesterday also continues to weigh on the pound, after the UK’s finance minister admitted that the national debt would spiral above 90% of GDP, while leaving the EU will cost GBP226m a week in borrowing thanks to higher inflation, lower growth and stagnant wages.

Looking ahead, amid holiday-thinned trades and in absence of significant economic releases from the UK docket, the GBP/USD pair will remain at the mercy of the USD dynamics.

GBP/USD Levels to consider            

At 1.2420, the pair finds immediate resistances placed at 1.2441/48 (1h 200-SMA/ 20-DMA), 1.2487 (daily R1) and 1.2514 (Nov 21 & 22 high). While supports are lined up at 1.2400 (zero figure) and 1.2381 (Nov 22 low) and below that at 1.2308 (Nov 21 low).

To learn more about this topic, check our video analysis