GBP/USD Forecast: Strong UK data and weaker USD lifts cable to a 2-week high
|The British Pound strengthened across the board on Thursday, with the GBP/USD pair surging to its strongest level in two-weeks after stellar UK monthly retail sales data eased fears of economic fallout following UK’s decision to end its membership with the European Union. The pair extended its up-move to 1.3200 neighborhood during early Asian session on Friday before retracing from highs to currently trade with slight negative bias around mid-1.3100s.
Meanwhile, the greenback remained under selling pressure after the minutes from FOMC July monetary policy meeting failed to provide any clues on the timing on next Fed rate-hike decision. Amid broad based US Dollar selling, the EUR/USD pair touched a fresh post-Brexit high level of 1.1366 and now seems headed for a third weekly gains in the previous four.
Friday's only release from the UK, public sector net borrowing, would be a non-market-moving event and hence, today's moves in the FX market would be solely driven by broader sentiment surrounding the greenback.
Technical outlook
GBP/USD
Thursday’s momentum assisted the pair to conquer an important confluence resistance near 1.3115 level, comprising of 200-SMA (4-hourly) and 50% Fibonacci retracement level of 1.3372-1.2866 recent downslide, which now seems to protect immediate downside. Failure to hold this resistance turned immediate support should extend the corrective move towards 1.3100 handle and any further weakness below 1.3100 mark is likely to be limited and might be bought into near 1.3060-55 strong support marking 38.2% Fibonacci retracement level.
Meanwhile on the upside, 61.8% Fibonacci retracement level near 1.3175-80 zone is acting as immediate hurdle, which if cleared should continue boosting the pair further towards 1.3255-60 horizontal resistance before the pair darts towards reclaiming 1.3300 level and head back to monthly high resistance near 1.3350-70 region.
EUR/USD
On 1-hourly chart, the pair is seen oscillating within a short-term ascending trend-channel and is now retracing from channel resistance. From current levels, further retracement is likely to find support at 50-hourly SMA near 1.1300 round figure mark. A follow through pull-back seems to extend the corrective move towards the ascending trend-channel support near 1.1250-45 area. Only a decisive break below this important support would negate prospects of any further up-move for the pair and turn it vulnerable to extend its downslide in the near-term.
Meanwhile on the upside, 1.1370-75 region (trend-channel resistance) remains immediate hurdle, which if cleared should lift the pair to pre-Brexit swing high resistance near 1.1425-30 region. Sustained momentum above 1.1400 handle could further get extended towards 1.1500 psychological mark before retesting early May daily closing high resistance near 1.1530-35 area.
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