The British pound experienced some relief as the dollar weakened today. However, the pound remains vulnerable as Ultra-hawk Neel Kashkari continues to maintain an aggressive monetary policy stance. The Bank of England’s rate cuts for 2024 have been “dovishly” repriced, leaving room for subsequent rate hikes and potentially strengthening the pound in the future. The focus for today is on US GDP report and more Fed speak, which could provide insight into whether the hawkish rhetoric will continue or be toned down.
Technical analysis shows that GBP/USD is trading at the key support level of 1.21, with bulls defending this psychological handle. However, this turnaround may be short-lived as fundamentals still favor the US dollar. IG Client Sentiment Data shows that retail traders are currently net long on GBP/USD, with 71% of traders holding long positions. This sentiment and outlook can be influenced by daily and weekly positional changes.
Overall, the pound is experiencing some relief from a weaker dollar, but its vulnerability remains. The focus for today is on US GDP and Fed speak, which could impact the pound’s future performance. Technical analysis suggests that bulls are defending the key support level, but fundamentals still favor the US dollar. Retail traders are currently net long on GBP/USD.