GBP/USD storms through key 1.2250 resistance ahead of BoE’s Bailey

• GBP/USD extends a three-day winning streak, targeting 1.2300.
• Broad US Dollar weakness, light trading underpinning Cable’s uptrend.
• Pound Sterling takes out critical resistance at 1.2250, Bailey in focus.

GBP/USD has started a new week with a bang, extending the previous week’s uptrend into the third straight day on Monday. Pound Sterling bulls benefit from a broadly weaker US Dollar, as risk sentiment remains in a firmer spot so far this session.

The Asian stocks track the Wall Street rally, in the wake of easing US inflation and expectations of a dovish Federal Reserve (Fed) policy path. Meanwhile, the latest data from the CME Group showed that hedge funds are betting on a rally in the Pound Sterling at the start of 2023, which is underpinning the sentiment around the currency pair.

Further, a US market holiday could also keep the volatility high around the GBP/USD pair amidst thin liquidity. The focus now shifts toward the Bank of England (BoE) Governor Andrew Bailey’s testimony before the UK Parliament's Treasury Select Committee, due at 15:00 GMT.

Technically, last week’s falling wedge confirmation is playing out in favor of Pound Sterling bulls, as they recapture the critical 1.2250 resistance.

Up next, buyers look to take out the 1.2300 round figure in an ultimate move toward the six-month top of 1.2446.

The 14-day Relative Strength Index (RSI) is moving northward above the midline, justifying the latest upswing. Adding credence to the move higher is the Golden Cross validated in the previous week. The 50-Daily Moving Average (DMA) pierced through the 200DMA from below on Wednesday.

Alternatively, any retracements from higher levels will retest the intraday low at 1.2205 before moving in lower to challenge Friday’s low at 1.2150.

 Further down, the mildly bullish 21DMA resistance-turned-support, now at 1.2097. will remain on sellers’ radars.

GBP/USD: Daily chart

GBP/USD: Additional technical levels