October 4, 2022 7:51:01
The Great Britain pound retests the 1.1400 mark for the first in the last two weeks despite a stronger U.S dollar. Although, it could be a short-term enjoyment for GBP buyers. As the fundamentals on a broader perspective remain unchanged. The move came following the U.K’s Finance Minister Kwarteng announcement of a U-turn on income tax abandonment. The policymakers ditched the proposal to remove the 45% tax cut.
The Sterling hit the lowest of the year at $1.0384 on September 26. Earlier, the newly formed government announced its mini-budget on September 23 worth £45 billion by 2026-27 that comprised several tax cuts, making investors worry about the UK’s debt levels.
In the recent developments, the fiscal plan to be revealed in November would now be delivered later this month, soothing the market nerves.
A general risk-off mood was supported by the Australian central bank, surprisingly the central bank raised the interest rate lower than expected by 25bps.
Still, the U.S Dollar Index (DXY) remained elevated above 111.0, a concern for the Pound.
GBP/USD pierced 20-day EMA
On the daily chart, the GBP/USD pair had a miraculous recovery from the lows of 1.0300 made on September 26. The spot had a goodish upside run of more than 900-pip. The bullish sign is coming as the pair pierced above the critical 20-day EMA. The next upside hurdle is placed near the 50-day EMA at 1.1564.
The RSI (14) reads at 51, showing the possibility of further gains.
On the flip side, a breakdown below 1.1200 would challenge the bulls.
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