GBPUSD Approaching Key Support Level: Analyzing Factors and Future Scenarios | Forexlive

The GBPUSD is moving towards a new low and is currently approaching a key support target between 1.2198 and 1.2202 (green numbered circles). That support area correlates with swing highs from March 13, 14, 17, and part of yesterday’s trading. Yesterday, the price broke above the swing area, leading to a run towards another swing area between 1.22608 and 1.22823 (see red numbered circles). The peak price reached 1.22843 before stalling, and traders leaned against the swing area, pushing the price back towards the 1.22000 level.

Now, the market is trying to determine if the break higher yesterday was justified by banking concerns in Europe and the US (a safety bid) and the potential for higher inflation in the UK, leading to higher interest rates. With the banking sector appearing more stable today, the price has been pushed lower. However, key events starting tomorrow could impact the trading environment.

UK CPI data is scheduled for release, with expectations for YoY inflation to remain elevated at 9.9%. On Thursday, the Bank of England (BOE) is expected to increase interest rates by 25 basis points and possibly signal a pause to observe impact on hikes to future inflation (and run off of the gains from last year). Additionally, the Fed’s meeting tomorrow will influence the market from the dollar’s standpoint. These events suggest increased risk and volatility in the trading environment.

Currently, the ceiling from yesterday has attracted sellers, and support is evident at the 1.2200 level. A break below this level would provide traders an opportunity to probe further downside, with the next target being the 38.2% retracement of the move up from last week’s low at 1.21799, followed by the 50% midpoint at 1.21477. These levels also correspond with swing highs from February 21 and 28 (see blue numbered circles). Conversely, if buyers want to take a shot near the 1.2200 level with a stop loss below, that remains a viable option as well for those traders (with stops o.