GBP/USD Price Analysis: 100-day SMA/38.2% Fibo. confluence holds the key for bulls
|- The UK political crisis, dismal domestic data dragged GBP/USD to a nearly two-week low.
- The mixed technical set-up warrants some caution before placing aggressive bearish bets.
The GBP/USD pair continued losing ground through the mid-European session and dropped to a near two-week low, around the 1.3555 region in the last hour.
Against the backdrop of the UK political turmoil, dismal domestic data undermined the British pound and dragged the GBP/USD pair lower for the second successive day on Friday. This also marked the fifth day of a negative move in the previous six and seemed unaffected by moded US dollar weakness, weighed down by retreating US Treasury bond yields.
From a technical perspective, acceptance below the 23.6% Fibonacci retracement level of 1.3161-1.3749 move up was seen as a key trigger for bearish traders. The subsequent downfall might have already set the stage for an extension of the recent pullback from the vicinity of mid-1.3700s, or a two-month high touched last Thursday.
Meanwhile, technical indicators on the daily chart – though have been losing positive traction – are still holding in the bullish territory. Hence, any further downfall is more likely to find decent support near the 1.3540-1.3530 confluence. This comprises 100-day SMA and the 38.2% Fibo., which should now act as a pivotal point.
A convincing break below will suggest that the GBP/USD pair has topped out in the near term and dragged spot prices to the 1.3500 psychological mark. The downward trajectory could further get extended towards the 50% Fibo. level, around the 1.3455 region.
On the flip side, the 23.6% Fibo. level, around the 1.3610 region, now seems to act as immediate strong resistance. Any further move up might continue to meet with a fresh supply near the 1.3660 area, which if cleared decisively will suggest that the corrective slide has run its course. The GBP/USD could then reclaim the 1.3700 round-figure mark.
GBP/USD daily chart
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.