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Abstract: The GBPUSD remained bullish during the European session on Tuesday and rose above 1.2550. The GBP was boosted by tough remarks by Bank of England (BOE) Governor Andrew Bailey and other BOE policymakers in the UK Parliament.

Fundamentals

Mann, the Monetary Policy Commissioner of the BOE, said in his parliamentary testimony that he hoped to see interest rates higher than the current level. Ramsden, Deputy Governor of the BOE, said that the possibility of further raising interest rates could not be ruled out.

Andrew Bailey, governor of the BOE, made a speech at an event overnight, strongly saying that the BOE has not considered cutting interest rates, and said that "it is too early to consider cutting interest rates now".

He warned of persistently high inflation in the service sector and pointed out that wage growth was still "high". He added that when the inflation rate is high, we will not take risks. "

In his speech, Bailey pointed out that the latest forecast of the Monetary Policy Committee shows that it may be necessary to adopt a restrictive monetary policy stance "for a long time".

Bailey also stressed the need to be vigilant against inflation trends, indicating that the BOE is still open to further interest rate hikes when necessary. He warned: "We must pay attention to further signs of persistent inflation, which may require interest rates to rise again."

At present, the GBPUSD shows an overall bullish trend, indicating that it is possible to continue to be bullish to the first resistance level of 1.2588. However, the Relative Strength Index deviates from the price, indicating that the price may reverse and fall.

In that case, the price may fall back to the first support level of 1.2398, which is determined as overlapping support. Further down, the second support level of 1.2206 is the support level for the pullback, indicating that the bearish trend can stop at this level.

If the GBPUSD strengthens further, in terms of resistance, the first resistance level of 1.2588 is the overlapping resistance level. In a higher position, the second resistance level of 1.2733 is the resistance level for the rebound, which is consistent with the 61.80% Fibonacci retracement, further enhancing its potential as a resistance level.

Technical Analysis

The GBPUSD is expected to resume its bullish trend as the GBPUSD breaks above the 200-day SMA and the 1.2500 psychological barrier. In addition, the GBPUSD rose to the highest level in the last two months, and oscillators suggest that upside momentum is strengthening.

However, the Relative Strength Index reached the overbought zone and has seen a bearish divergence, while the MACD remains in the positive zone above the 0-axis, with both reflecting continued activity.

If the bulls continue to maintain control, it will pave the way for the first resistance level at 1.2588. If it goes further higher, the bulls will test the level of 1.2720.

If bears push the price below the 38.2% Fibonacci and 200-day SMA at 1.2460, this could lead to a decline to the first support level at 1.2398, below which bears would test the 23.6% Fibonacci retracement level at 1.2300. If the latter is broken, the downtrend could continue towards the 20- and 50-day SMAs.

Overall, despite the recent strong rebound in the GBPUSD, there are some hurdles to consider before its medium-term outlook produces a bullish reversal. It is recommended to buy the dips under the condition that the key support is not broken.

Trading Recommendations

Trading direction: Long

Entry price: 1.2500

Target price: 1.2720

Stop loss: 1.2370

Deadline: 2023-12-05 23:55:00

Support: 1.2456, 1.2398, 1.2376

Resistance: 1.2588, 1.2629, 1.2641