GBP/USD: Technical selling extends, back below 1.3950
|- Fails to benefit from USD weakness, retreat in T-yields.
- Breaches key resistance-turned-support of 1.3945.
The GBP/USD pair is seen consolidating the retreat from the key 1.40 psychological levels, having found some support near the midpoint of 1.39 handle on the release of upbeat UK UK public finances data.
However, the recovery lacks follow-through, despite the renewed USD weakness and sell-off in Treasury yields, as markets believe the recent GBP/USD rally to the highest levels since the Brexit vote could be overdone.
Meanwhile, the pound also ignored the positive comments delivered by the UK’s Finance Minister Hammond, as chart-driven selling remains the main theme so far. That’s said, attention now turns towards the UK CBI industrial order expectations data for fresh trading impetus amid a lack of fresh economic drivers in the US session ahead.
Looking ahead, “in terms of fundamental, the key reports for the UK economy are set to be delivered on Wednesday and Friday with the UK December labor market report and the first reading of the fourth quarter UK GDP due. The UK labor market is set to report the unemployment rate at a 4-decade low of 4.3% while closely watched average earnings excluding bonuses are expected to accelerate to 2.5% y/y,” FXStreet’s European Chief Analyst, Mario Blascak, PhD, writes.
GBP/USD Technical Levels
Slobodan Drvenica, Information & Analysis Manager Windsor Brokers Ltd, notes, “…clear break above 1.40 pivot would trigger stops parked above and spark fresh bullish acceleration towards 1.4100 (round-figure barrier) and 1.4123 (FE 161.8% of current wave C of five-wave sequence from 1.3038). Buying on correction remains favored scenario, with 4-h Tenkan-sen marking initial support at 1.3929, followed by Kijun-sen at 1.3879 and hourly trough at 1.3838 (18 Jan low). Key near-term support lies at 1.3787 (rising 10SMA) and extended dips should reverse above it to keep the bullish structure intact and avoid the risk of deeper pullback seen on break.”
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