GBP/USD: Will the recovery sustain ahead of the UK data?
|- DXY on the defensive.
- Re-attempts 1.3550.
- A busy UK docket ahead.
The GBP/USD pair staged a solid comeback from a dip to near 1.35 handle in the overnight trades, now consolidating the recovery below the 1.3550 mark, as the focus shifts towards the UK economic releases due later in the session ahead.
GBP/USD tested 10-DMA at 1.3546
The spot is looking to regain the bids on its way to the midpoint of the 1.35 handle, as the bulls benefit from the corrective slide seen in the US dollar against its main competitors after the USD index reached six-day tops of 92.36 yesterday on the back of surging Treasury yields. The USD index now trades -0.09% to print daily lows of 92.14 while 10-year Treasury yields consolidate near 10-month peaks of 2.555%.
However, it remains to be seen if the spot can sustain the recovery mode, as the sentiment around the pound remains dented amid latest UK political risks amid PM May’s cabinet reshuffle news. Moreover, downbeat UK (BRC) retail sales data combined with falling British house prices also add to the recent bearishness seen in Cable.
Further, sterling could also bear the brunt of the latest findings of the British Chambers of Commerce's (BCC) Quarterly Economic Survey, which should that the UK’s businesses are in a subdued mood ahead of Brexit.
Valeria Bednarik, Chief Analyst at FXStreet, writes, “This Wednesday, the UK will release its latest Industrial and manufacturing figures, alongside with November´s Trade Balance data, expected to post a large £2.6B deficit.”
Meanwhile, the US docket remains fairly light, with the second-tier data in the import prices and wholesale inventories due to be reported.
GBP/USD Technical Levels
Bednarik adds: “From a technical point of view, the pair is biased lower according to technical readings in the 4 hours chart, as the pair stands below is 20 SMA that anyway lacks directional strength, while technical indicators hold within bearish territory, the Momentum heading modestly lower and the RSI trying to stabilize around 45. The low posted last week at 1.3495 is the immediate support, with a break below it favoring a continued decline toward the 1.3410 price zone. Support levels: 1.3495 1.3450 1.3410. Resistance levels: 1.3545 1.3590 1.3615.”
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