The GBP/USD pair builds on last week's rally from the vicinity of the 1.2000 psychological mark and gains positive traction for the third successive day on Monday. The momentum remains uninterrupted through the early North American session and lifts spot prices to over a one-month high, around the 1.2240 region in the last hour.

In the absence of any major market-moving economic data on Monday, the focus will remain glued to the FOMC decision on Wednesday and the Bank of England policy meeting on Thursday. Apart from this, traders, this week will confront the release of the latest consumer inflation figures from the UK on Wednesday. The crucial macro data, along with the highly-anticipated central bank meetings, will help to determine the near-term trajectory for the GBP/USD pair.

A downward-sloping resistance line from late January, around 1.2210 by the press time, appears a tough nut to crack for the GBP/USD pair buyers amid nearly overbought RSI (14) and mildly bullish MACD signals.

Also acting as an upside hurdle is the 61.8% Fibonacci retracement level of the quote’s fall from late January to early March, around the 1.2200 round figure.

It should be noted that the mid-February top surrounding 1.2270 appears the last defense of the GBP/USD bears, a break of which could propel the Cable price towards the 2023 top marked in January around 1.2450.

On the flip side, the 50% Fibonacci retracement level of 1.2125 could lure intraday sellers of the GBP/USD pair but a convergence of the 50-EMA and one-week-old ascending support line, near 1.2085, appears a tough nut to crack for the bears to retake control.

Also acting as an important support is the 100-EMA level surrounding 1.2060, a break of which won’t hesitate to challenge multiple lows marked during late February, around 1.1930-20.

Overall, GBP/USD is likely to witness a pullback but the bears are far from retaking control.

Strong bearish pullback expected on Sterling

Mar 20 2023