FX.co ★ Toxifire | GBP/USD

The GBP/USD currency pair experienced a rebound towards the 1.2650 level during the Asian trading session on Thursday. This upward movement was primarily driven by a weakening US Dollar. The US Dollar Index (DXY), which measures the greenback's strength against a basket of six major currencies, remained relatively steady near 106.50. However, downside risks for the US Dollar may be limited by recent dovish comments from Federal Reserve officials. Boston Fed President Susan Collins suggested that while further rate cuts are necessary, policymakers should exercise caution to avoid overdoing it. Similarly, Fed Governor Michelle Bowman emphasized the persistent inflation and advocated for a cautious approach to rate cuts. Despite these dovish sentiments, market expectations for a 25 basis point rate cut in December remain strong, with economists predicting a federal funds rate of 4.25%-4.50% by the end of the year. Geopolitical tensions, particularly the ongoing Russia-Ukraine conflict, have also impacted the GBP/USD pair.

Technically, the GBP/USD pair has rebounded after a six-day decline that pushed it to a six-month low of 1.2595. The pair is currently finding support near a key trend line from October 2023, and technical indicators like the RSI and Stochastic suggest that the price may be oversold and due for a rebound. However, significant upside potential may be limited until the pair decisively breaks above the August low at 1.2663-1.2685. Further resistance levels to watch include the 1.2730 line, which overlaps with the 61.8% Fibonacci retracement level of the April-September rally. Beyond this, the 200-day SMA and the 50% Fibonacci mark at 1.2865 could pose additional hurdles to further upward momentum.