GBP/USD: bulls have eyes for 1.2776 December high

Currently, GBP/USD is trading at 1.2350, up 0.44% on the day, having posted a daily high at 1.2379 and low at 1.2241.

UK: 10-year gilt yield rises after BoE statement

GBP/USD is consolidated after the BoE and Fed action this week. The BoE was surprisingly hawkish while the Fed was less hawkish than expected. The market had been pricing in three hikes for the year but those estimates have come right down. Many do not expect the Fed to hike again this year given the economic backdrop and indeed the global headwinds that Yellen so openly voiced as a concern. 

The BoE, on the other hand, drove UK yields higher on the back of hawkish twists earlier today. Kristin Forbes (a known hawk) voted for a March hike and the statement revealed that ‘some members noted that it would take relatively little further upside news…for them to consider that a more immediate reduction in policy support might be warranted. 

GBP/USD levels

"We think downside risks remain quite significant in the near to medium term, however, and await the close of the week to assess broader risks for the GBP," explained analysts at Scotiabank, adding, "Intraday, price signals look potentially soft, with weak price action developing; weakness back under 1.2245/50 may see the GBP slip lower again."

Meanwhile, analysts at Commerzbank with a bullish view explained that the price has based near term and is likely to re-test the 55 and 100-day ma at 1.2374/1.2407. Above here initial resistance is 1.2583 (9-th Feb high). However, only above 1.2658 channel would allow for further strength to the 1.2776 December high."