GBP/USD marches firmly towards 1.3350 after US consumer confidence improves
- The British pound advances sharply up some 0.57%.
- An upbeat market mood, increased demand for risk-sensitive currencies like the GBP, the US dollar weaken.
- US Consumer Confidence risen the most since July, the GBP/USD trended higher on the release.
- GBP/USD Technical Outlook: In the near-term upwards, but it would face strong resistance at 1.3374.
The British pound is rallying during the New York session, trading at 1.3344 at the time of writing. The market sentiment is upbeat, as shown by European and US stock indices, trading in the green while the greenback weakens across the board. Additionally, the US Consumer Confidence increased in December, more than estimations.
Investors’ assessment of the Omicron variant slightly dented the market mood before Wall Street opened. Nevertheless, at the last hour, equities rallied, while in the FX market, risk-sensitive currencies point upwards, led by the GBP. Furthermore, positive news from South Africa, reporting that the current wave of contagious are 80% less likely to be hospitalized if people catch the Omicron strain, according to a study, improved risk appetite.
The Conference Board reported that Consumer Confidence in December rose by 115.8, more than the 110.8 estimated. Since July, it is the best mark before the Delta wave that weakened confidence in the Q3. “Consumer confidence improved further in December, following a very modest gain in November,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.
Franco added that “meanwhile, concerns about inflation declined after hitting a 13-year high last month, as did concerns about COVID-19, despite reports of continued price increases and the emergence of the Omicron variant.”
The GBP/USD reacted upwards after the report hit the wires, jumping from 1.3318 to 1.3334.
Looking ahead in the week, the UK economic docket would not report data on Thursday. Meanwhile, across the pond, Durable Goods Orders for November, Initial Jobless Claims, and the Core Personal Consumptions Expenditures, the Fed’s favorite gauge of inflation, will entertain GBP/USD traders.
GBP/USD Price Forecast: Technical outlook
The GBP/USD daily chart depicts that USD bulls have the edge. The daily moving averages (DMAs) reside well above the spot price, confirming the abovementioned. Nevertheless, the near-term trend is upward and will face strong resistance at the December 16 swing high at 1.3374.
In the event of breaking above the previously mentioned level, the GBP/USD would challenge the 1.3400 figure. A breach of the latter could send the pair rallying up to the 50-DMA at 1.3459.
On the other hand, the first support would be 1.3300, which, once broken, would open the door for further losses. The first support would be the December 7 swing high previous resistance-turned-support at 1.3289, followed by the December 21 low at 1.3197.