GBP/USD eyeing UK GDP and Fed minutes to extend the bullish break-out momentum
|The US Dollar pared some of overnight strong gains to more than 5 week highs as investors wait for the release of minutes from the latest FOMC meeting to get some additional clarity over the central bank's near-term monetary policy outlook. With hawkish comments from the Fed Chair Janet Yellen, during her testimony before Congress, market participants would be keen to review the meeting minutes in order to gauge possibilities of a rate-hike action at the Fed's upcoming meeting in March.
GBP/USD
The GBP/USD pair, however, defied broad based greenback strength and rebounded sharply from 1.2400 important support and broke out of a short-term symmetrical triangular formation. The pair is trading with positive bias for the third consecutive session and now looks forward to the revised UK GDP growth number for further traction.
With short-term technical indicators in neutral / bullish territory, a follow through buying interest seems to assist the pair to extend the break-out momentum immediately towards 1.2525-30 resistance area marking 50% Fibonacci retracement level of 1.2706-1.2347 downslide. Momentum above this immediate hurdle could further get extended towards 1.2565-70 resistance area (Feb. 9 high), also coinciding with 61.8% Fibonacci retracement level.
Meanwhile on the downside, 1.2485-80 confluence resistance break area, comprising of symmetrical triangle resistance and 38.2% Fibonacci retracement level, now seems to protect immediate downside. Failure to hold the said resistance turned support region, leading to a subsequent drop below 1.2455-50 horizontal zone, would turn the pair vulnerable to head back towards a short-term ascending trend-line support near 1.2400 round figure mark with some intermediate support at 23.6% Fibonacci retracement level near 1.2430 level.
The shared currency remained under selling pressure due to concerns over political developments in the Euro-zone. Investors remained concerned about the prospects of Marine Le Pen winning the French Presidential election and could move towards withdrawing France out of the common trade bloc.
The pair on Tuesday dropped below 1.0580-75 support area but has managed to find some support near 1.0525 area, marking 61.8% Fibonacci retracement level of 1.0341-1.0829 up-move. However, with short-term indicators pointing to a bearish set-up, the pair seems move likely to break this immediate support and head towards testing a short-term descending trend-line support near 1.0480 level. A follow through weakness below the trend-line support would open room for resumption of the pair’s prior weakening trend and drag the pair further towards 1.0400 round figure mark.
On the flip side, any recovery attempts might now confront resistance near 1.0575-80 region, also coinciding with 50% Fibonacci retracement level. A sustained recovery back above this immediate hurdle, and a subsequent strength above 1.0600 handle, now seems to lift the pair beyond 38.2% Fibonacci retracement level resistance near 1.0645-50 region towards an important horizontal resistance near 1.0675-80 region, en-route 23.6% Fibonacci retracement level resistance near 1.0710-15 zone.
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