GBP/USD analysis: outlook shifts after reversal from 1-month highs
|GBP/USD Current Price: 1.2696
The GBP/USD pair jumped on Tuesday to 1.2783, highest since May 21 but then reversed sharply and dropped to the lowest since Friday. The Pound continues to be limited by the UK political drama and Brexit uncertainties. The main candidate in the leadership race and the potential next PM, Boris Johnson repeated today his intention to leave the European Union on October, with or without a deal. A decline of the US dollar boosted the move higher in Cable but then, as the greenback recovered strength despite weaker-than-expected US data and lower yields, reversed sharply. Comments from Fed’s officials and some profit taking favored the US dollar that rose in the market after four days of losses. On Wednesday, Bank of England’s Governor Carney and members of the Monetary Policy Committee will testify before the Parliament (Inflation hearings). In the US, the key report will be Durable Goods Orders.
After trading for a few hours above the previous monthly highs, GBP/USD pulled back to the recent familiar range. The decline could extend to the flat 20-day SMA at 1.2660. If it drops below, the bearish pressure will likely rise, signaling more losses ahead, as the Momentum indicator would drop below 100. On the upside, 1.2750 remains the critical resistance limiting the upside. Ahead of the Asian session, the pair looks set to continue to consolidate between 1.2715 and 1.2670 with risks tilted to the downside as price holds under 1.2700 and below a flat 20 SMA in the four hours chart.
Support levels: 1.2700 1.2650 1.2630
Resistance levels:1.2720 1.2760 1.2800
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