GBP/USD justifies falling wedge breakout to cross 1.3150 with eyes on BOE, Ukraine

• GBP/USD refreshes weekly high during three-day uptrend, confirmed bullish chart formation the previous day.
• BOE is up for the third consecutive rate-hike to tame inflation.
• Fed began the rate-lift journey with hints of six stops moving forward, Powell disappointed bulls.
• As the rate-hike is already given, a positive surprise is necessary for the bulls to keep reins.

GBP/USD buyers flirt with the weekly top, up 0.07% intraday around 1.3160 as traders await the Bank of England’s (BOE) interest rate decision on early Thursday.

The cable pair cheered broad US dollar weakness to print a bullish breakout of the short-term falling wedge. However, mixed sentiment in the market and anxiety ahead of the BOE seems to probe the quote’s further upside of late.

The US Dollar Index (DXY) dropped the most in a week the previous day, inactive around 98.40 at the latest, despite the Federal Reserve’s (Fed) 0.25% increase to the benchmark rate. The Fed also signaled six such moves during this year but comments suggesting downside risk to inflation going forward by Chairman Jerome Powell seem to have weighed on the greenback.

That said, Kyiv’s rejection of proposed neutrality in the 15-point peace plan and the International Court of Justice’s order to Russia to suspend the invasion of Ukraine challenge sentiment but the continuation of talks and recently easy tone of Moscow keeps markets hopeful. China, on the other hand, offers good support to the sentiment in Asia-Pacific markets due to easy covid numbers and push for more measures to boost the economy in the first quarter (Q1).

Amid these plays, the S&P 500 Futures drops 0.13% intraday whereas the Asia-Pacific equities track Wall Street gains. Further, the US 10-year Treasury yields decline 4.5 basis points (bps) to 2.14% while reversing from the highest levels since May 2019.

Looking forward, the “Old Lady” is up for a hat-trick of a 0.25% increase in the key rate to tame inflation. Earlier in the week, the UK jobs report also favored bulls and hence GBP/USD has further upside to track. However, all this news are mostly priced in and hence a major positive surprise need to keep the buyers on the table.

Read: BOE Interest Rate Decision Preview: A hat-trick and a difficult balancing act

Other than the BOE, the second-tier US data relating to housing, jobs and manufacturing will join the risk catalysts to direct short-term GBP/USD moves.

Technical analysis

GBP/USD confirmed a falling wedge bullish formation the previous day, also crossed the 50-SMA, which in turn allows the cable pair to renew weekly high on Thursday.

That said, the 1.3200 threshold will challenge the immediate upside ahead of late February’s low and the 200-SMA, respectively near 1.3275 and 1.3400.

In a case where GBP/USD rises past 1.3400, the theoretical target of 1.3720 will be in focus. However, multiple tops marked during February around 1.3640-45 will act as an additional filter to the north.

Alternatively, pullback moves may initially aim for the 50-SMA level of 1.3100 before testing the aforementioned wedge’s resistance line, now support around 1.3080.

During the quote’s weakness past 1.3080, a three-day-old rising support line and the latest multi-month low, close to 1.3057 and 1.3000 will be in focus.

GBP/USD: Four-hour chart

Trend: Further upside expected