GBP/USD climbed back toward 1.3375 on Tuesday as the Pound trimmed earlier losses, but the 200-day simple moving average near 1.3400 continues to cap the recovery. Traders are holding fire ahead of US inflation data and Fed Chairman Kevin Warsh's testimony to Congress.
The British Pound is pushing back toward the 1.3375 area against the US Dollar on Tuesday, trimming previous losses as it aims to retest the 200-day simple moving average that sits just below 1.3400. That indicator has capped the Pound's recovery over the past two weeks.
The move comes with the US Dollar slightly softer as investors wait on two events. Markets expect US Consumer Prices Index figures to show a slight moderation in prices, yet still well above the Federal Reserve's 2% target. Fed Chairman Kevin Warsh then faces the first of two hearings before US Congress scheduled this week.
Domestic politics steady the Pound
The Pound has held a positive trend since Prime Minister Keir Starmer resigned in late June. Investors are confident that Andrew Burnham, the best-positioned candidate to replace him, will respect Chancellor Reeves' fiscal rules.
The 200-day SMA remains the wall
GBP/USD trades at 1.3378, having broken the downtrend resistance line drawn from the May highs while staying capped below the 200-day SMA at 1.3397. Momentum reads neutral-to-bullish, with the Relative Strength Index hovering just above 50 and the MACD in positive territory.
The SMA near 1.3397 looks like a tough level to crack. If bulls clear it, the June 15 and July 10 high near 1.3455 becomes the target. On the downside, the floor of the last two weeks' range at 1.3330 should challenge bears first, with the broken trendline now at 1.3290 and the June 22 and 30 highs around 1.3270 as the next supports below.
Source: FXStreet
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