GBP/USD: Upside remains capped below 1.4200 ahead of Carney

• Syria tensions led risk-aversion keeps the gains capped.
• All eyes remain on BOE Carney’s speech amid lack of significant macro data.

Having failed several attempts to regain the 1.42 handle in the Asian trades, the GBP/USD pair entered a phase of bullish consolidation, as the bulls await fresh impetus for the next push higher.  

The cautious trading seen in the spot is mainly driven by mounting fears of a Russia-US war over Syria, as markets refrain from placing any directional bets on the higher-yielding currency, the GBP, in times of uncertainty and market unrest.

Moreover, stalled selling in the US dollar against its major rivals, following the release of more hawkish-than-expected FOMC March meeting minutes, also keeps a check on Cable’s upside.

In the day ahead, the pair will continue to get influenced by the broader market sentiment, in absence of first-tier economic releases. Meanwhile, markets look forward to the speech by the BOE Governor Carney due at 1900 GMT for fresh insights on the monetary policy programme, especially after the BOE member Broadbent did not touch upon the central bank’s monetary policy.

GBP/USD levels to watch

According to Haresh Menghani, Analyst at FXStreet, “from a technical perspective, the pair's up-move back above the 1.4200 handle might continue to confront some fresh supply near the 1.4220-30 region, above which the bullish momentum is likely to get extended even marked by 61.8% Fibonacci expansion level of the 1.3712-1.4245 up-move and subsequent retracement.”

On the flip side, a follow-through retracement below the 1.4165-60 area is likely to accelerate the fall back towards 23.6% Fibonacci retracement level support near the 1.4120-15 region, below which the pair might turn vulnerable to head back towards retesting the key 1.40 psychological mark, with intermediate supports pegged near the 1.4100 handle, 1.4080-75 area and 1.4040 level,” Haresh adds.