GBP/USD is approaching the 29-month high of 1.3266 reached on Tuesday, bolstered by renewed weakness in the US Dollar and persistent risk-off sentiment following Nvidia’s disappointing guidance.
The pair benefits from contrasting monetary policy trajectories between the US Federal Reserve (Fed) and the Bank of England (BoE), which continues to support GBP/USD’s upward movement.
However, further gains are contingent on the upcoming second estimate of US Q2 Gross Domestic Product (GDP) and sustained trading above the 21-Simple Moving Average (SMA) on the four-hour chart. The 21-day SMA is currently positioned at 1.3210; maintaining this level on a four-hourly closing basis is crucial for targeting the 1.3250 psychological barrier.
If GBP/USD surpasses this level, it could prompt new buying interest, pushing the pair towards the two-year high of 1.3266 and potentially the 1.3300 round figure.
On the other hand, a failure to maintain above the 21-SMA could prompt sellers to re-enter, dragging GBP/USD down towards the 50-SMA at 1.3120.
The Relative Strength Index (RSI) is currently above 60, indicating that the recovery momentum might continue.
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