- On Wednesday, the British pound surges some 0.31%.
- Thin liquidity conditions, and the lack of economic data, exacerbate volatility in the last days of the year.
- GBP/USD Price Forecast: The 1-hour chart depicts a bullish bias, as GBP buyers eye the 1.3500 figure.
The British pound rallies trading the New York session, trading at 1.3452 at press time. Investors’ mood is mixed, as depicted by Europan stock indices fluctuating between gainers and losers, while US equity futures point towards higher open. Factors like assessments of the Omicron variant and month, quarter, and year-end flow cause market participants to book profits as 2022 looms.
US Treasury yields rise, the DXY falls
In the US money markets, the US 10-year benchmark note advances four basis points, punches through the 1.50% threshold, sits at 1.522%, while the US 2-year Treasury yield stays flat. In the meantime, the US Dollar Index, which tracks the US dollar value against a basket of six rivals, slides some 0.09% down to 96.11, weighing on the buck vs. the risk-sensitive GBP.
With 2022 around the corner, investors are preparing towards a year of higher inflation, central bank tightening, led by the Federal Reserve, the coronavirus pandemic, and China’s economic outlook. As the easy money cycle approaches the end, at least for now, US Treasury yields began to reflect the US central bank hawkish shift, as US 10s, the 20s, and 30s, surged.
An absent UK economic docket left the GBP/USD traders leaning towards the remainder of the minimal economic data from the US. Across the Pond, the Trade Balance posted a deficit of 97.78B, more than the 89.00B contraction expected for November, while in some 30 minutes, Pending Home Sales for November are expected to rise up to 0.5%.
GBP/USD Price Forecast: Technical outlook
The GBP/USD 1-hour chart depicts that the pair remained subdued during the Asian session. Nevertheless, as European traders got to their desks, they pushed the pair through the 100 and the 50-hour simple moving averages (SMAs).
To the upside, the GBP/USD first ceiling level would be the R2 daily pivot at 1.3483. A breach of the latter would expose the 1.3500 figure, immediately followed by the R3 daily pivot at 1.3529.
On the flip side, the first line of defense for GBP bulls would be the R1 daily pivot at 1.3457, followed by the confluence of the 50-SMA and the daily pivot point at 1.3436 then the 100-SMA at 1.3420.