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GBP/USD Retreats After Powell’s Hawkish Comments

By:
Vladimir Zernov
Published: Mar 22, 2022, 06:46 UTC

GBP/USD settled below 1.3175 and is testing the support level at 1.3140.

GBP/USD

In this article:

Key Insights

  • Fed Chair Jerome Powell says that the Fed could raise rates more aggressively. 
  • Treasury yields move to new highs, which is bullish for the U.S. dollar. 
  • A successful test of the support at 1.3140 will push GBP/USD towards the support level at 1.3110.

British Pound Is Under Pressure Against U.S. Dollar

GBP/USD continues its attempts to settle below the support at 1.3140, while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle above the resistance at 98.35 and is testing the next resistance level at 98.70. In case this test is successful, the U.S. Dollar Index will move towards the 99 level, which will be bearish for GBP/USD.

Today, foreign exchange market traders will likely focus on the dynamics of U.S. government bond markets. The yield of 2-year Treasuries gained strong upside momentum and made an attempt to settle above 2.19%. Meanwhile, the yield of 30-year Treasuries settled above the 2.55% level.

Yields moved higher after Fed Chair Jerome Powell said that the Fed could raise rates more aggressively to curb inflation. The Fed is forced to become more hawkish at a time when WTI oil trades above the $110 level. In this environment, Treasury yields may rise further, which will be bullish for the U.S. dollar.

Technical Analysis

gbp usd march 22 2022

GBP/USD is trying to settle below the support level at 1.3140. This support level has been tested during yesterday’s trading session and proved its strength. In case GBP/USD settles below this level, it will move towards the next support at 1.3110.

A successful test of the support at 1.3110 will open the way to the test of the support at 1.3080. If GBP/USD declines below this level, it will head towards the next support at 1.3050.

On the upside, a move above 1.3140 will push GBP/USD towards the resistance level at 1.3175. If GBP/USD manages to settle above this level, it will head towards the next resistance level, which is located at the 20 EMA at 1.3195. A successful test of the resistance at the 20 EMA will push GBP/USD towards the resistance at 1.3230.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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