GBP/USD Price Analysis: Climbs above 1.2300 as street anticipates a steady Fed policy

• GBP/USD has scaled above the critical resistance of 1.2300 amid a cheerful market mood.
• The USD Index is likely to attract more offers in hopes that the Fed will keep interest rates steady.
• The Cable resumed its upside after a bullish hidden divergence.

The GBP/USD pair has extended its recovery above the round-level resistance of 1.2300 in the Asian session. The Cable has got strengthened amid weakness in the US Dollar Index (DXY) in hopes that the Federal Reserve (Fed) will keep interest rates steady in its May monetary policy meeting to contain the banking fiasco.

The USD Index is struggling in sustaining above 102.60 and is expected to attract more offers amid the improved risk appetite of the market participants. S&P500 futures are holding gains generated in the Asian session. The 500-US stocks futures basket has registered a three-day winning streak as United States banking jitters are fading after the US government promised to expand emergency liquidity assistance.

The Pound Sterling has been strengthened after hawkish guidance by Bank of England (BoE) Governor Andrew Bailey in his speech at the London school of Economics. BoE Bailey reiterated the need for more rate hikes if inflation continues to remain persistent.

GBP/USD resumed its upside journey after a bullish Hidden Divergence on a two-hour scale. The Cable formed a higher low while the Relative Strength Index (RSI) (14) formed a lower high, which indicated that the momentum oscillator got oversold in an uptrend and produced a bargain buy opportunity for the market participants.

Upward-sloping 20-and 50-period Exponential Moving Averages (EMAs) at 1.2279 and 1.2260 respectively, indicate more upside ahead.

The RSI (14) has scaled into the bullish range of 60.00-80.00, which warrants more gains.

Should the asset break above the horizontal resistance plotted from March 23 high at 1.2343, Pound Sterling bulls would drive Cable toward January 26 high at 1.2430. A break of the latter would expose the asset to a fresh nine-month high near the psychological resistance at 1.2500.

On the flip side, a downside move below March 24 low at 1.2190 would drag the asset toward February 24 high at 1.2143 and March 15 low at 1.2010.

GBP/USD two-hour chart