GBP/USD: Bulls cherish four-week high ahead of an eventful day
GBP/USD trades near the four-week high of 1.3150 while heading towards the European open on Tuesday. The pair took advantage of news report signaling delayed Brexit and increased to the mentioned high. However, the events like quarterly inflation report hearings from the BoE officials, the UK PM Theresa May’s statement to parliament and the Fed Chair’s semi-annual testimony might provide a fresh impulse to the traders.
The early-day report that the British opposition Labour party leader Jeremy Corbyn marked a U-turn by showing will to oust no-deal Brexit provided initial gains to the British Pound (GBP). The up-move was then carried forward as The Sun reported that PM May will formally rule out a no-deal Brexit and in-turn favor delayed departure from the EU region.
Looking forward, the inflation report hearings by the Bank of England (BoE) Governor Mark Carney and few monetary policy committee (MPC) members will be the first catalyst to observe at 10:00 GMT. The BoE policymakers will appear before the Treasury Select Committee to discuss the February Inflation Report. The central bank authorities are mostly expected to repeat their praise for economic developments while signaling no-deal as a big risk to future policy moves.
During the UK’s afternoon, PM May will make a statement concerning her next steps to the British parliament. She may discuss how well the EU is in support of her initial plans before formally proposing to avoid no-deal Brexit.
After the British events, the first-day appearance of the Federal Reserve Chairman Jerome Powell’s semi-annual testimony will be closely observed. Powell will testify before the Senate Banking Committee in Washington D.C. Alike BoE officials, the Fed Chair is also expected to repeat his recent comments favoring patience when it comes to a monetary policy decision. Powell might emphasize on economic outlook while likely to give hints for the balance sheet normalization going forward.
GBP/USD Technical Analysis
The January 31 high of 1.3160 acts as an immediate resistance for the pair before targeting the 1.3200 upside barrier comprising a descending trend-line that joins highs of September and January months.
It should also be noted that a downside break of 1.3100 can recall 1.3060 on the chart whereas 200-day simple moving average (SMA), at 1.3000, could challenge the bears afterward.