GBP/USD: a mixed outlook fundamentally, but technically negative below 20 DMA circa 1.3250
|GBP/USD is currently trading at 1.3185, with a high of 1.3193 and a low of 1.3170 having opened at 1.3186 and closed NY at 1.3185.
Sterling has been a rollercoaster since the double top highs of the business done on the 18th Oct last week. There are a number of fundamentals that traders are having to attend to, from Brexit, BoE sentiment and US politics. On Friday, traders were at the mercy of all of the above which made for plenty of two-way business.
The week ahead: a busy calendar, including ECB, US/ UK GDP, Aussie CPI- Nomura
GBP/USD, at the start of this week, is relatively steady ahead of European open and the UK CBI quarterly Industrial Trends survey on Monday. However, the main focus will stay with the first print of GDP, albeit which is only based on a limited amount of information (40% of what is typically needed to produce a final estimate of GDP) and is, as a result, often revised as noted by analysts at Nomura.
Brexit: Britain's five biggest business lobby groups call for swift transition deal
Meanwhile, echoes of sentiment for a soft Brexit will underpin the upside and the recovery in the pound vs the bearish backdrop on the flipside of a dovish BoE and a stronger dollar on Trump's tax reform policies that are getting a lot of attention and is a driving force for a resurgence in the greenback.
GBP/USD levels
- Support levels: 1.3145 1.3090 1.3050
- Resistance levels: 1.3220 1.3260 1.3300
Valeria Bednarik, chief analyst at FXStreet explained that, from a technical point of view, the daily chart shows that the recovery was not enough to change the latest negative bias:
"The pair continues developing below a sharply bearish 20 DMA, whilst technical indicators hold below their mid-lines, although with no clear directional strength. In the 4 hours chart, the pair presents a neutral stance, trading a couple of pips above the 50% retracement of its latest bullish run and a flat 20 SMA, while technical indicators turned flat around their mid-lines," Valeria added.
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