GBP/USD bounces off lows, near 1.2280 ahead of US data

After bottoming out in the mid-1.2200s in early trade, GBP/USD is now looking to retake the 1.2270/80 band amidst some selling pressure around the buck.

GBP/USD looks to US releases

The pair has come under renewed selling pressure at the beginning of the week, as the greenback managed to revert the negative start and rebound from daily lows when tracked by the US Dollar Index.

The risk-associated universe remains under pressure today amidst increasing expectations of a rate hike by the Federal Reserve at its 2-day meeting next week. In fact, Chair J.Yellen and other FOMC governors have recently advocated for gradual rate hikes as long as US fundamentals remain on track, leaving the door open for a Fed move later this month.

According to Reuters, the probability of higher rates on March 15 is at 83% based on Fed Funds futures prices, a tad lower than above 85% seen last Friday.

On the domestic front, uncertainty around Brexit negotiations and some weakness in recent UK’s fundamentals keep GBP under pressure along with further bearishness arising from the speculative positioning, as net shorts in Sterling have increased to the highest level since mid-December during the week ended on February 28, according to the latest CFTTC report.

GBP/USD levels to consider

As of writing the pair is losing 0.22% at 1.2277 and a break below 1.2212 (low Mar.3) would aim for 1.2197 (low Dec.28 2016) and finally 1.2036 (low Jan.11). On the flip side, the initial up barrier aligns at 1.2308 (high Mar.2) followed by 1.2389 (55-day sma) and then 1.2412 (100-day sma).