GBP/USD Price Analysis: Bulls Dominate Above 1.31 as USD Softens

• GBP/USD saw intraday selling on Tuesday followed by renewed strong bullish momentum.
• The Fed’s hawkish expectations of rising US bond yields continued to be a tailwind for the dollar.
• The positive risk sentiment limited the US dollar as a safe haven and helped limit the pair’s losses.

The GBP/USD price analysis quickly recovered modestly from the almost two-week lows hit in the past hour and was last traded around the 1.3140 area.

Gains capped by hawkish Fed

On Tuesday, the pair earlier struggled to hold modest intraday gains to 1.3115 and fell on fresh US dollar buying for the fifth consecutive day. Increasing interest rates by 50 basis points at the following two FOMC meetings continued to boost the dollar.

Rising US yields

US Treasury yields boosted expectations for a more aggressive Fed policy to combat high inflation. Moreover, the benchmark 10-year US Treasury yield again reached near three-year highs or surpassed the 2.5% threshold.

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Dovish Bank of England

A dovish statement made by Bank of England Governor Andrew Bailey yesterday that the Bank sees signs of a slowdown in economic growth also weighed on the British pound. This month’s policy decision followed the tone of the previous one, in which officials softened language on the need for additional rate hikes.

Positive risk sentiment

Further pressure was added to the GBP/USD pair by this development. However, buoyed by the prospect of progress in the Russia-Ukraine peace talks, a generally positive risk tone helped cap the safe-haven dollar and limit its slide. This, in turn, requires traders to exercise caution.

What’s next to watch for GBP/USD price analysis?

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Therefore, the Russian-Ukrainian saga will continue to be the subject of market attention. In addition, global geopolitical events will affect the general attitude toward market risk. US bond yields will fuel demand for the US Dollar in the near term and create trading opportunities around the GBP/USD pair.

Following the start of the North American session, traders will pay attention to US economic data, including the JOLTS Jobs Vacancy Index and the Consumer Confidence Index.

GBP/USD price technical analysis: Bulls eying at double top

The GBP/USD price posts a huge up bar, combatting with 20 and 50 SMAs on the 4-hour chart. The 1.3140-50 zone will be important to watch as this is the immediate resistance for the pair. Sustaining above the 1.3130 area will be a call for bullish dominance. The volume data also reveals that the previous widespread down bar could not sustain, and the subsequent buying was more powerful than the selling. The next upside target will be 1.3175 ahead of the double top at 1.3223.