GBP/USD heading towards 1.2550, where history will be made!

The GBP/USD continues to rise for the third consecutive session, supported by the speech of the Bank of England (BoE) Governor Andrew Bailey at the Henry Plumb Memorial Lecture on Monday. The GBP/USD pair is trading around 1.2530 during Tuesday's Asian session, approaching 11-week highs. The GBP/USD was last seen trading near 1.2470, where the 38.2% Fibonacci retracement of the downtrend from July to October is located. If the pair confirms that level as resistance, it could extend its downward correction towards 1.2430 and 1,2400. Despite the US Dollar (USD) facing strong selling pressure last week, weak inflation data in the UK has made it challenging for the GBP/USD to extend its uptrend. Meanwhile, British Prime Minister Rishi Sunak stated on Monday that they can start the next phase of fiscal policy and focus on reducing taxes now that inflation has halved. Sunak also noted that taxes can be reduced once inflation and debt are under control, adding that they want to support businesses to invest through lower taxes. All of this is pushing the price towards 1.2550. A crucial point where we could witness a technical confirmation of continuation or reversal. Today's and tomorrow's data during the London session will be interesting. At the time of writing, the daily chart does not show scenarios of a downtrend, but the market is unpredictable, so entry should only be made with the necessary confirmations. Personally, I will wait for the price around 1.255 and then look for M15/H4 for a long/short entry depending on technical confirmations. Comment and leave a like, greetings from Nicola, the CEO of Forex48 Trading Academy.

Comment:

The GBP/USD exchange rate continues to show a positive trend for the fourth consecutive day on Wednesday, oscillating around the 1.2535-1.2540 area during the Asian session, just below its highest level since September 9 touched the previous day. The static level of 1.2550 serves as immediate resistance for GBP/USD, followed by 1.2610 and 1.2660. On the downside, the first support is located at 1.2510, followed by 1.2460. A daily close below the latter could open the door for a deeper correction toward 1.2390. GBP/USD surpassed 1.2500, reaching its highest level since early September near 1.2550 on Tuesday. Statements from Bank of England (BoE) members regarding the monetary policy outlook could influence the pair's performance in the short term. BoE Governor Andrew Bailey stated on Monday evening that they must monitor signs of persistent inflation that may require an interest rate increase. Bailey reiterated that the policy will need to be restrictive "for quite some time yet" and emphasized that it is too early to consider rate cuts. In case officials continue to try to convince markets that they might not necessarily be done with rate hikes, the Pound could strengthen against its major rivals. Furthermore, there is a signal that the price is encountering resistance at the level of 1.2550, a level that could bring the price down to the support level of 1.2370 before continuing Long towards 1.27 - 1.29.