GBP/USD Squeezes Higher as Risk Sentiment Improves

GBP/USD – rates, charts and analysis

• The first citizen to buy a Silicon Valley bank.
• The British pound settles around 1.2250 against the US dollar.

Most read: Latest British Pound: The GBP/USD bullish trend is intact but slowing down

Financial markets got an early boost on Monday after US bank First Citizen BancShares revealed that it had bought failed US lender Silicon Valley Bank. First Citizen has purchased approximately $72 billion in SVB assets and loans at a discount of $16.5 billion while FDIC will own approximately $90 billion in SVB assets.

The European banking sector rallied higher at the open on SVB news but gave up most of this outperformance as I write.

European Bank index futures

There is not much in the way of UK data this week until Friday when the latest quarterly and yearly GDP numbers are released. UK is expected to grow by 0.4% YoY while QoQ growth is not expected.

On the right side of GBP/USD, the greenback has a few more data available this week with the latest look at US GDP on Thursday and the Fed’s preferred core PCE released on Friday, both notable lifts. .

For all market movement data releases and events, see DailyFX Economic Calendar

GBP/USD is trading around 1.2250, although today’s range is very narrow. The recent higher highs pattern has been broken while the higher lows pattern is in place. The three moving averages are supportive, while the CCI indicator is starting to move lower and outside the extreme levels. The first level of resistance remains at 1.2292, ahead of 1.2300 and 1.2344, while there is a support block between 1.2170 and 1.2210. Cable traders should wait for the volatility to return to the pair before making any move.

GBP/USD daily price chart – March 27, 2023

Chart via TradingView

Retailer data is mixed

Retail trader data shows that 48.89% of traders are net long with the short to long ratio at 1.05 to 1, the number of net long traders is 2.64% higher than yesterday and 8.55% higher than last week, while the number of net long traders is 2.64% higher than yesterday and 8.55% higher than last week. Traders Traders’ net short positions are 3.60% higher than yesterday and 0.22% higher than last week.

We usually take a view contrarian to crowd sentiment, and the fact that traders are short on the bargain suggests that GBP/USD prices may continue to rise. Positioning is more net than yesterday but less net than last week. The combination of current feelings and recent changes gives us more Mixed GBP/USD trading bias.

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