October 27, 2022 03:48 AM ET
By: AnalysisWatch
The GBP/USD fails to capitalize on the overnight breakout above the psychological 1.1500 level and falls back from its highest level since September 13, which was reached on Thursday.
An intraday rise in U.S. government bond yields is helping the U.S. dollar recover from its one-month low, acting as a headwind for the GBP/USD pair. In addition, generally positive sentiment in equity markets could weaken the safe-haven buck and further support the major.
The British pound, on the other hand, is supported by the appointment of the new British Prime Minister, Rishi Sunak. Market participants see Sunak as someone who can bring stability to the recently volatile markets and keep the British economy stable. Sunak also promised to correct the mistakes of the Truss government and lead the country out of the current economic crisis, which boosted investor confidence. This, in turn, suggests that the GBP/USD pair will continue to appreciate in the near future.
From a technical perspective, the sustained overnight break through the supply zone between 1.1475 and 1.1480 and the 1.1500 level also underpins the positive outlook. Therefore, any significant corrective decline could now be seen as a buying opportunity and remain limited, at least for now. Traders now expect fresh impetus from the advanced US third quarter GDP report. On Thursday, the U.S. ective, the sustained overnight break through the supply zone between 1.1475 and 1.1480 and the 1.1500 level also underpins the positive outlook. Therefore, any significant corrective decline could now be seen as a buying opportunity and remain limited, at least for now. Traders now expect fresh impetus from the advanced US third quarter GDP report. On Thursday, the U.S. also released the new orders for durable goods and the weekly initial jobless claims program.
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