GBPUSD broke the Q1 range high to tap the psychological 1.2500 level yesterday, last seen in June 2022. However, the pair is struggling to find acceptance above the psychological 1.2500 level (trading at 1.2470 at the time of writing) as a dampening mood and dovish comments from BoE policymaker Tenreyro seem to be weighing on cable.
The dampening mood following the European open this morning could be down to a fresh selloff in banking stocks during yesterday's US session. Comments from JPMorgan CEO Jamie Dimon around the effects of the recent banking crisis did not help matters either with the CEO stating the effects will be felt for years to come. Further downside on banking stocks today could dent sentiment further and work in favor of the USD while a recovery today could allow GBPUSD to finally gain acceptance above the key 1.2500 handle.
Despite the Banking sector selloff and growing expectations that the Fed may pause its hiking cycle in May, Federal Reserve policymaker Loretta Mester reiterated her belief that rates need to be above 5% for some time. Her comments come as market participants raise expectations for a pause from the Fed in May. It will be interesting to see if fellow Fed policymakers reiterate her rhetoric in the days ahead.
On the daily timeframe GBPUSD is trading at the key psychological 1.2500 level as well as the top of the rising wedge pattern (hinting at a break lower). Further signs that a retracement could be incoming soon lies in the RSI which is almost at overbought territory while the daily timeframe also shows hints of a potential death cross. (50-day MA about to cross below 100-day MA).
Recent moves on GBPUSD have largely been driven by broad-based USD weakness rather than the technical picture. A continuation of the improved sentiment seen on Monday and early on yesterday could help spur a further rally and acceptance above the 1.2500 level.