GBP/USD clings to gains around 1.2050 amidst flat USD
- Cable continues to vacillate around the mid-1.2000s.
- UK CBI Distributive Trades surprised to the upside in February.
- BoE’s C.Mann favoured extra tightening in the next months.
The inconclusive price action around the dollar seems to be enough to spark a humble advance in GBP/USD to the 1.2050 region on Thursday.
GBP/USD looks to USD, risk trends, BoE
GBP/USD trades slightly in the positive territory at the beginning of the second half of the week, as the quid appears underpinned by another hawkish message from BoE’s Mann as well as some loss of upside momentum in the buck.
Back to the BoE, well-known hawk member C.Mann favoured extra tightening at the upcoming gatherings, at the time when she ruled out any emergence of a pivot in the bank’s monetary stance.
In the UK data space, the CBI Distributive Trades improved to 2 for the current month (from -23) ahead of Friday’s release of the Consumer Confidence gauged by Gfk for the month of February.
News from the money market sees the 10-year Gilt yields in the positive foot near the 3.70% level, or multi-week highs.
What to look for around GBP
Same as with the rest of the risk complex, the British pound is expected to track the dollar’s price action and the policy divergence between the Federal Reserve and the Bank of England when it comes to near-term direction.
Furthermore, the UK economy’s bleak outlook for the remainder of the year in combination with persistent elevated inflation leaves the prospects for further gains in the Sterling somewhat curtailed in the short term, while the BoE approaching its terminal rate does not look helpful for the quid either.
Key events in the UK this week: Gfk Consumer Confidence (Friday).
GBP/USD levels to consider
As of writing, the pair is retreating 0.06% at 1.2038 and faces the next support at 1.1930 (200-day SMA) followed by 1.1914 (monthly low February 17) and finally 1.1841 (2023 low January 6). On the flip side, the breakout of 1.2164 (55-day SMA) would open the door to 1.2269 (weekly high February 14) and then 1.2447 (2023 high January 23).