GBP/USD - What’s next after Monday’s Doji candle?
|GBP/USD dropped from the high of 1.2908 to a low of 1.2854 before closing largely unchanged on the day at 1.2881 yesterday. The price action clearly points to Doji candle, which indicates indecision in the markets.
Holds above confluence of trend line support and 50-DMA
An end of the day close at 1.2881 ensured the confluence of the trend line (drawn from May 22 high & June 8 high) and 50-DMA remains intact. The Barclaycard data released in early Asia showed that the UK consumer spending growth hit a 15-month low of 2.5% in June compared to 2.8% in May. Meanwhile, the British Retail Consortium (BRC) and KPMG showed total sales rose by 2% in June. On a like-for-like basis, which excludes new store openings, the retail sales rose by 1.2% over the period.
The mixed batch of consumer spending data did little to boost the GBP, but did ensure the currency stays above 1.2872 (50-DMA) and 1.2862 (trendline support).
Focus on BoE speak
Bank of England (BoE) Monetary Policy Committee (MPC) member Haldane and Broadbent are scheduled to speak at 10:00 GMT and 11:00 GMT, respectively. Haldane is likely to reiterate his call for a rate hike.
Broadbent has not yet commented publicly since a narrow vote to keep rates unchanged last month. Hence, his comments could yield a bigger reaction in the GBP pairs… especially if they happen to tilt on a hawkish side as it would signal the policy makers are reaching consensus on rate hike.
GBP/USD Technical Levels
A break above 1.2909 (5-DMA) would expose 1.2936 (10-DMA), above which a major hurdle is seen at 1.2978 (June 8 high). On the downside, a breach of 1.2872 (50-DMA) - 1.2862 (trendline support) could yield a sell-off to 1.2818 (June 14 high) - 1.2810 (50% Fib R of 1.2589-1.3031).
FXStreet Chief Analyst Valeria Bednarik says, “The 4 hours chart shows that the price continues developing below a bearish 20 SMA, this last around 1.2920, while technical indicators have bounced modestly within negative territory, maintaining the risk towards the downside. The same chart shows that the price held above the 38.2% retracement of the latest daily advance at 1.2860, the level to break to confirm additional declines ahead.”
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