GBP/USD: Recovery remains capped below 1.4000, US NFP eyed
|- Risk-off and USD rebound keeps Cable under pressure.
- US NFP data and Powell’s speech to set the tone for the USD in coming days.
After a brief stint higher in the overnight trades, the GBP/USD pair fell back in the red zone, as the bulls failed to sustain above the 1.40 handle amid a renewed risk-aversion wave triggered by fresh US-China trade threats.
The White House announced that the US President Trump is considering another $100B tariff on China, “in light of China’s unfair retaliation” against earlier US trade actions. The risk currency, GBP, tends to suffer in times of market unrest and panic.
Moreover, a pick-up in buying interest seen around the US dollar against its main competitors, also collaborated to the renewed sell-off seen in Cable, as markets readjust their USD positions heading into the crucial US labor market report and Fed Chair Powell’s speech.
Meanwhile, the GBP bulls also remain on the back foot ahead of the BOE Governor Carney’s speech scheduled later in the American session. “In the absence of any market-moving economic data from the UK, the USD price dynamics and repositioning trade should act as key determinants of the pair's momentum ahead of the key event risk (US payrolls),” FXStreet’s Analyst Haresh Menghani explains.
GBP/USD levels to watch
Haresh adds, “Technically, yesterday's fall marked a fresh bearish break and the pair's inability to extend overnight modest rebound reinforces the negative outlook. Hence, a follow-through weakness below 1.3965 intermediate support should continue dragging the pair further towards testing the 1.3900 handle. On the upside, any meaningful recovery attempts back above the 1.40 handle might continue to confront some fresh supply near the 1.4020-25 region, which if cleared might trigger a short-covering bounce back towards 1.4075-80 heavy supply zone.”
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