GBP/USD supported at $1.2560 – Can the ascending channel lead an uptrend?

GBP/USD rises confidently above 1.2600, reversing the first daily loss in five days on a quiet Asian morning on Wednesday. That said, Cable’s daily high was around 1.2610 at press time. The recent increase in GBP/USD could be attributed to the US dollar’s inability to sustain its rebound from a one-month low, despite growing inflation concerns and the Fed’s cautious role.

Lately, US President Joe Biden hailed the work of the US Federal Reserve (Fed) in controlling price rises, followed by US Treasury Secretary Janet Yellen’s admission that she was wrong on the matter. of inflation.

“U.S. Treasury Secretary Janet Yellen said on Tuesday that she had been wrong in the past about the direction inflation would take, but controlling price growth is President Joe Biden’s top priority. and he supports the actions of the Federal Reserve to achieve this,” Reuters reported.

GBP/USD

Despite pulling back from 102.17, the US dollar index (DXY) posted its first daily positive in four days on Tuesday. The U.S. dollar index rallied the day before as traders cheered hawkish comments from Fed Board of Governors member Christopher Waller and positive national data.

According to Reuters, the Fed’s Waller said he supports an interest rate hike of another 50 basis points at upcoming Federal Reserve meetings. The policy rate should be above neutral by the end of the year to reduce demand. In contrast, the US Chicago Purchasing Managers Index and CB Consumer Confidence both beat May forecasts, while the Dallas Fed Manufacturing Index fell to its lowest level in two years.

Domestically, unrest from British Prime Minister Boris Johnson’s party during the Covid-led lockdowns is combining with UK business leaders’ disappointment with the Northern Ireland Protocol (NIP) to weigh on GBP prices /USD. Concerns have been expressed about the role of the Bank of England (BOE) in controlling inflation. According to the Times, “In a pessimistic assessment of the UK’s economic outlook, the influence of Brexit and the potential ‘politicisation’ of monetary policy, the US investment bank (Bank of America) thinks investors will drop the pound after sustained weakness.”

The US ISM Manufacturing PMI for May is expected to come in at 54.5 vs. 55.4 previously, while Fedspeak and other risk catalysts could entertain GBP/USD traders. The market’s focus will remain on the US nonfarm payrolls expected on Friday.

GBP/USD Technical Outlook

GBPUSD is holding steady above the 1.2590 level and is starting to offer positive trades now in an attempt to restart the bullish wave. The uptrend hinges on price stability above the 1.2590 level, noting that our early targets start at 1.2725 and extend to 1.2860 after breaking above the previous level.

Today’s trading range should be between 1.2560 support and 1.2710 resistance. Investors will keep an eye on CB US consumer confidence to determine today’s emerging trends. Good luck!

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