GBP/USD’s strong rebound from 1.3110 extends to 1.3185

• The pound bounces up to 1.3185, erases previous losses.
• Cable rushes higher ahead of the London closing time.
• GBP/USD, unlikely to rally significantly above 1.32/33 – ING.

The pound has erased previous losses during Friday’s American session. The pair has bounced up strongly from 1.3110 to reach intra-day highs at 1.3185 so far.

Cable turns positive on daily charts

The GBP/USD has rallied more than 0.5% in the last few hours, to erase the European trading session’s decline. In absence of significant macroeconomic releases, positions squaring moves ahead of the London closing bell might be behind the pound’s recovery.

The pound had been hitherto trading lower, weighed by the Bank of England’s dovish statement, after releasing its monetary policy decision on Thursday, while the sourer market mood, as hopes of progress in the Russia – Ukraine peace talks start to fade have favored the safe-haven USD, thus increasing negative pressure on the GBP.

Beyond that, investors have remained remain cautious, reluctant to take excessive risks ahead of the conference between Biden and Chinese President Xi Jinping, after the US warned China about important consequences if they decide to send military aid to Russia.

GBP/USD: levels near 1.32/33, the best case for some time – ING

From a longer-term perspective, currency analysts at ING are skeptical about a significant GBP rally over the coming months: “Unlike the Fed, the BoE delivered a cautious 25bp rate hike, with one dissenter voting for unchanged rates. The market removed roughly one 25bp hike from its expectations this year (Bank Rate now priced at 1.90% in December) (…) Given we strongly favor the dollar this summer, levels near 1.32/33 in the cable may be the best for some time.”

Technical levels to watch