GBP/USD Price Analysis: Consecutive Dojis indicate indecisiveness

• GBP/USD has stretched its recovery above 1.2440 as USD Index is struggling to defend its four-day support.
• BoE Ramsden warned that the central bank must stop the risk of high inflation becoming embedded in the economy.
• Consecutive Doji formations by GBP/USD indicate a sheer contraction in volatility.

The GBP/USD pair has rebounded sharply above 1.2440 in the early Tokyo session. The Cable is looking to extend its recovery ahead as investors are very much confident of further rate hikes from the Bank of England (BoE).

BoE Deputy Governor Dave Ramsden said in an interview with The Times that the central bank must stop the risk of high inflation becoming embedded in the economy. He added there were still signs of stubbornly high inflation. However, the United Kingdom Retail Sales data landed on Friday contracted more than expected. Monthly (March) Retail Sales data contracted by 0.9% while the street was anticipating a contraction of 0.5%. UK’s stubborn inflation has heavily impacted households’ retail demand.

Meanwhile, S&P500 futures are showing some losses in the early Asian session after a choppy Friday. Investors are witnessing a stock-specific action amid the quarterly earnings season, keeping investors risk-averse. The US Dollar Index (DXY) is struggling to defend the crucial support of 101.70.

Consecutive Doji candlesticks formation on the daily scale by GBP/USD indicates a sheer contraction in volatility. The Cable is struggling to find decisive movements amid an absence of a potential trigger. The 20-period Exponential Moving Average (EMA) at 1.2395 is providing cushion to the Pound Sterling.

Meanwhile, the Relative Strength Index (RSI) (14) has shown a loss in the upside momentum and has shifted into the 40.00-60.00 range.

Further stretch in recovery above April 13 high at 1.2537 will drive the asset towards a fresh 10-month high at 1.2597, which is 08 June 2022 high. A breach of the latter will expose the asset to May 27 high at 1.2667.

On the flip side, a slippage below April 10 low at 1.2345 will expose the asset to March 30 low at 1.2294 followed by March 27 low at 1.2219.

GBP/USD daily chart