GBP/USD Forecast: likely to face stiff resistance near 1.2930 region, UK retail sales eyed
|The US Dollar extended overnight slump from near 3-week highs and helped the GBP/USD pair to build on surprisingly stronger UK jobs data-led recovery move from over 1-month lows. The greenback weakened across the board after minutes from the Federal Reserve's July meeting revealed that policymakers remain concerned over easing inflationary pressure and reinforced market expectations that further rate hike in 2017 seems unlikely. The FOMC members, however, largely agreed over the timing of balance sheet normalization but did little to lend any support to the greenback.
Meanwhile, the British Pound was also supported by the latest UK employment details, showing unemployment rate fell to the lowest level since 1975 and wages rose more than expected in June. Focus now shifts to the release of UK monthly retail sales data ahead of the US data dump, which would be looked upon for some short-term trading impetus.
From a technical perspective, the pair has managed to defend 1.2850-40 confluence support area (100-day SMA and 61.8% Fibonacci retracement level of 1.2589-1.3269 recent up-swing) and has now recovered back above the 1.2900 handle. From current levels, the recovery move could get extended towards an important confluence support break-point now turned strong resistance near the 1.2930 region, comprising of 50-day SMA and 50% Fibonacci retracement level. A convincing break through the mentioned hurdle could trigger a short-covering rally towards the key 1.30 psychological mark, also coinciding with 38.2% Fibonacci retracement level.
On the flip side, the 1.2865 region, closely followed by 1.2840 level, remains immediate support levels to defend. A decisive break below the mentioned supports would turn the pair vulnerable to break below the 1.2800 handle and head towards testing 1.2775 support area. The bearish slide could further get extended towards 1.2720 horizontal support en-route the very important 200-day SMA support near the 1.2640 region.
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