GBP: Approaching 1.2000 Level Amid Rate Dynamics

GBP: 1.2000 in sight

GBP: 1.2000 in sight

The sterling market is now bracing for the 1.2000 level to be tested in Cable. Unlike the euro, sterling is not suffering from a big rate disadvantage to the dollar, but the GBP/USD 2-year swap rate gap has shrunk to only 17bp – from a 135bp peak in July – after the combined effect of a hawkish Fed and dovish Bank of England repricing.

That swap rate gap is consistent with GBP/USD trading around current levels and a break below 1.2000 would not be an aberration compared to recent history. Should we see the 1.2000 support collapse, the 1.1830 March low is the next support level to watch. The UK data and central bank calendar is very quiet today.

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Topics

gbp/usd gbp support level market dynamics.UK data repricing rate dynamics hawkish FED 1.2000 level sterling market 2-year swap rate gap dovish Bank of England 1.1830 March low central bank calendar

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