GBP/USD Clinches Fresh 2-Month Highs



December's surprise rate hike by the Bank of England (BoE) has helped the British Pound, which comes from a three-week profitable streak against the greenback, undeterred by last week's hawkish minutes from the Federal Reserve.

The US central bank had made an agressive pivot last month with its QE tapering acceleration and the projection of three rate hikes in 2022, but its UK counterpart out-hawked it, by becoming the first G7 bank to increase interest rates.

On the Omicron front, the situation may not very good in the Old Albion, but UK PM Johnson ruled out stricter lockdown last Tuesday, which has also lend some support to the pound.

GBP/USD has covered most of its slump from the October highs to December's 2021 low and tries to surpass the 200Days EMA, having registered three daily closes above the Ichimoku cloud.

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Looking at the H4 chart, bulls are in the driver's seat at this stage and have 1.3675-99 in their sight, but we are still cautious about their ability to tackle this level and look towards 1.3835.

However, the Relative Strength Index (RSI) has repeatedly failed to follow through with higher highs creating risk for downward pressure. This could lead back towards the 1.3500 area, but a return below the EMA200 (at around 1.3430) would be needed to stop the upward aspirations.

Past Performance: Past Performance is not an indicator of future results.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

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