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The GBP/USD pair has come back above the 1.2100 figure, courtesy of the US Dollar weakness. China’s relaxing Covid-19 restrictions can keep the market’s positive sentiment.
The British Pound sharply advances after the European trading session that exhibited choppy trading, bouncing off the day’s lows around 1.2000. the pair is also posing a challenge to the 1.2100 figure during the US session. At the time of writing, the GBP/USD is trading at 1.2108.
The improved sentiment seems to impact the US dollar. The mood of Investors is mixed amidst the North American session. The lack of key US economic data, with the US Redbook released around 13:55 GMT, coming at 9.6% YoY, compared to the previous reading of 7.6%, failed to boost the US dollar’s performance.
Later at 15:00 GMT, US Pending Home Sales for November declined below expectations, but the Richmond Fed Indices are expected to improve slightly compared to its previous readings.
Another factor that improved sentiment is that China is removing Covid-19 restrictions on visitors while beginning to issue travel permits to Hong Kong residents.
China’s authorities started to issue passports and would officially reopen its borders on January 8. Even though the mood shifted positively, fears that inflationary pressures would rise keep traders wary.
In the meantime, the US Dollar Index losses 0.28%, down at 103.984, undermined by falling US Treasury bond yields.
Ahead into the week, the UK economic docket is empty, while the US calendar will feature Initial Jobless Claims for the week ending on December 23, ahead of the release of the Chicago PMI on Friday.
Technically; from the daily chart perspective, the GBP/USD is testing the 20 and 200-day Exponential Moving Average (EMA) at 1.2113 after bouncing from weekly lows around 1.2000. If the former is cleared, the nest resistance would be an upslope trendline previous support-shifted- resistance around 1.2180, followed by the 1.2200 figure.
