The GBP/USD pair rose to a intraday high of 1.5336 on Thursday before falling back to 1.5290 by NY closing. The weaker-than-expected UK retail sales data and an upbeat US retail sales and Philly Fed data failed to weaken Sterling as the overcrowded USD long trade witnessed modest profit taking.
The UK public sector net borrowing data is unlikely to have a major impact unless the figure is far lower than the consensus estimates. Overall, there is little or no fundamental trigger today, so the doors are wide open for the technical correction in the USD to continue heading into the weekend.
GBP/USD Technicals – Eyes Channel resistance
The 4-hour chart shows the pair moving in a rising channel. Sterling’s recovery from 1.5027 to 1.52 followed by a sideways action and a daily close above 1.5248 (50% of Apr-Jun rally) despite weak UK retail sales data indicates the pair is likely to stay strong heading into the weekend and re-test the channel resistance around 1.5350.
The odds of an upside move would increase if the pair manages to sustain above 1.5274 (50% fib expansion of 1.5027-1.5264-1.5154). Meanwhile, a daily close below 1.5248 (50% of Apr-Jun rally) would open doors for a fresh sell-off to 1.51 levels.
EUR/USD Analysis: Corrective rally under way, Eyes 1.08
Euro finally broke above the 4-hour 50-MA and extended gains to print a high of 1.0763 on Thursday before falling back to 1.07 levels in early Europe today. The speech from ECB’s Draghi and other officials scheduled today are unlikely to rattle markets and thus, the corrective rally in the EUR/USD could continue ahead of the weekend.
Technicals – Eyes 23.6% retracement resistance
Euro’s break above 4-hour 50-MA yesterday, and a bullish crossover between 50-MA and 100-MA could keep the currency in demand ahead of the weekend. A drop to 5-DMA 1.0690 could be seen, however, fresh bids could ensure the pair moves back above 1.0714 (confluence of hourly 200-MA and 4-hour 50-MA).
Given the RSI has turned bullish on hourly and 4-hour charts, the likelihood of the pair moving back above 1.0714 and extending gains to 1.08 is high. A break above 1.08 could see the pair run into offers at a strong resistance of 1.0835 (23.6% of 1.1495-1.0631). On the lower side, the pair could test 1.0667-1.0630 in case it fails to hold above the 5-DMA at 1.0690.
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