GBP/USD retreats to 1.3840, consolidates weekly gains
|- GBP/USD pulled back from fresh post-referendum high.
- US Dollar gained momentum near the end of the week despite US government shutdown.
The GBP/USD pair failed again to hold above 1.3900 on Friday and pulled back. After hitting a fresh high since June 2016 at 1.3944, one pip above Wednesday’s top, it pulled back. It moved during all US session with a bearish bias and recently bottomed at 1.3838.
The pound is still headed toward a weekly gain and is among the top performers of the week. On Friday it lost strength after UK data showed a larger-than-expected decline in retail sales. Also, some USD demand weakened the pair.
The greenback erased all losses and is posting modest gains on Friday despite the potential US government shutdown. Most analysts expect no major economic consequences.
Cable is consolidating a weekly gain of more than a hundred pips. It would be the fifth positive result in-a-row. The rally of the pound appears to be headed toward a test of 1.4000.
Levels to watch
GBP/USD again was capped by the 1.3940 area that has become a key resistance. The bearish correction that followed, is seen as normal. The bullish trend remains intact, but the pound needs to confirm above 1.3900 in order to clear the way to more gain. To the downside, support levels might lie at 1.3820 (Jan 12 high), 1.3775 and 1.3730 (Jan 15 low).
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