GBP/USD Forecast: still looking for direction
|The Pound strengthened during the Asian session, helped by persistent EUR weakness that sent the EUR/GBP pair to a fresh yearly low of 0.84. The GBP/USD pair advanced up to 1.2507 but retreated well below the 1.2500 level early Europe, ahead of the release of the UK Q4 preliminary GDP. Later on the day, the FOMC will release the Minutes of its latest meeting.
Negative headlines surrounding Brexit have not yet affected the Pound, as the European Commission chief, Jean-Claude Junker, has said that the UK will face a huge bill for leaving the EU, adding that it will take years to establish a trade deal. In the meantime, the House of Lords agreed without a vote to let the Brexit bill move to the next stage, and will be submitted to a special committee, which will debate next week. Lawmakers are trying to add amendments to the bill that at this points, has no restrictions or rules on what the government can do.
From a technical point of view, the 4 hours chart shows that the neutral stance persists, in spite of this intraday recovery, as the pair stands a few pips above a horizontal 20 SMA, whilst technical indicators lack directional strength, but at least stand in positive territory. There's a major Fibonacci resistance around 1.2540, from here the price has retreated steadily for most of this February, with tepid spikes beyond it being quickly reverted, which means that it would take some broad dollar weakness and really good news coming from the UK for the pair to break higher, and advance towards the 1.2600/20 region.
The pair has an immediate support at 1.2430, followed by 1.2380, where the pair has bottomed this last two weeks. Below this last, February low at 1.2345 comes next, as the level also stands for the 50% retracement of the latest daily bullish run.
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