GBP/USD Forecast: fails to register any meaningful recovery, struggling below 1.30 handle
|With risk appetite making a comeback during Asian session on Tuesday, the US Dollar traded mixed and held on to its technical boundaries against the British Pound and the shared currency. The GBP/USD pair attempted to extend its rebound from an important support near 1.2915, while the EUR/USD pair is reversing from a strong supply zone near 1.1270-80 area.
On Monday, the greenback reversed part of its losses after Hillary Clinton came out on top at the first US presidential debate against her Republican opponent, Donald Trump. A strong performance from Clinton cooled-off growing nervousness above the political uncertainty and was taken positively by the markets.
Economic data release on Monday showed US new home sales for the month of August surpassed expectations and fell less-than-expected, while from the Euro-zone upbeat German IFO business climate for September provided momentum for the EUR/USD pair to test a seven-day high.
Going forward, the Conference Board’s US Consumer Confidence index for the month of September will be the highlight from Tuesday’s economic calendar, which otherwise lacks any major market moving releases either from UK or Euro-zone.
Technical outlook
GBP/USD
Despite of its rebound from an important trend-line support, short-term indicators continue pointing toward further near-term downside. However, it would be prudent to wait for a decisive break below the ascending trend-line support in order to reaffirm the near-term bearish expectations.
A convincing break below 1.2915 strong support is likely to accelerate the slide towards August monthly lows support near 1.2870-65 region below which the pair could be headed back to retest post-Brexit swing low support near 1.2810 level, also coinciding with a short-term descending trend-channel support.
Meanwhile on the upside, the pair needs to sustain its recovery back above 1.3000 psychological mark in order to increase prospects of an additional recovery initially towards 1.3030 horizontal resistance and eventually towards the descending trend-channel resistance near 1.3065-70 region.
EUR/USD
The pair is once again retracing from a strong supply zone near 1.1270-80 region. Moreover, short-term technical indicators are on the verge of moving into bearish territory. Hence, a follow through selling pressure below 1.1230 immediate horizontal support is likely to drag the pair immediately towards 1.1200 handle below which the reversal could further get extended towards 100-day SMA support near 1.1185 region.
Conversely, a sustained move above 1.1270-80 important resistance might now trigger a sharp short-covering rally, lifting the pair beyond a short-term descending trend-line resistance near 1.1290-1.1300 region towards testing August monthly high resistance near 1.1355-60 region. Furthermore, a decisive break and close above 1.1300 handle would suggest continuation of the pair’s upward trajectory in the near-term.
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