GBP/USD analysis: Hovers around the very important 200-DMA ahead of UK jobs data
|With an intraday swing of around 100-pips, it was a rather volatile session for the GBP/USD pair on Monday and was influenced by the US Dollar price dynamics. China's decision to hike tariffs on $60 billion worth of American imports, despite the US President Donald Trump's warnings, exerted some heavy downward pressure on the greenback and pushed the pair to an intraday high level of 1.3041. However, escalating trade tensions between the world's two largest economies continued weighing on the broader market sentiment and the global flight to safety extended some support to the greenback and kept a lid on any strong follow-through.
Adding to this, the lack of progress in the UK cross-party Brexit talks further undermined the British Pound and collaborated to the pair's sharp slide to near two-week lows, around the 1.2940 region. The pair, however, managed to find some support during the Asian session on Tuesday following some positive comments by the US President Donald Trump, saying that he feels the Chinese trade negotiations will be successful. Meanwhile, the uptick lacked any strong conviction ahead of the UK labor market report, due for release later at 08:30 GMT.
From a technical perspective, the overnight slide dragged the pair back below the very important 200-day SMA and hence, a follow-through selling has the potential to continue exerting some downward pressure. The slide could get extended towards testing sub-1.2900 level - support marked by a 1-1/2-month-old descending trend-line resistance break-point. Failure to defend the mentioned resistance turned support might negate any near-term positive bias and turn the pair vulnerable to extend the downfall further towards challenging the 1.2800 round figure mark.
On the flip side, the key 1.30 psychological mark now becomes immediate strong resistance, which if cleared might assist the pair to make a fresh attempt towards clearing the 1.3030-40 supply zone. A sustained move beyond the mentioned barrier might trigger a short-covering move and lift the pair further towards reclaiming the 1.3100 round figure mark en-route the recent swing highs around the 1.3175 region.
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