GBP/USD: comfortable around 1.2700, critical resistance not far away

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2698

Boris Johnson and Jeremy Hunt are the final two candidates to replace PM May.
The Bank of England maintained its status quo, showed first signs of concerns about economic growth.

The GBP/USD pair is trading around the 1.2700 figure, up for a third consecutive day although off its daily high. The UK has provided many relevant headlines this Thursday, as the economy published May Retail Sales, which came in below the market's expectations yearly basis, at 2.3%. When compared to the previous month, sales decreased by 0.5% as anticipated. Core sales were down by 0.3% MoM and up by 2.2% YoY, this last, missing the market's forecast. Later in the day, the Bank of England unveiled its latest monetary policy decision. As expected, the central bank left its main rate unchanged at 0.75%, as well as the APP program. The accompanying statement didn't offer much new, as policymakers still assume a smooth Brexit scenario, in which they could hike rates at a gradual and at a limited pace. However, the document also noted that underlying economic growth appears to have weakened slightly in 1H 2019, while policymakers cut their Q2 GDP estimate to 0.0% from 0.2% QoQ.

Finally, Tories had voted twice, to end up with the two final candidates that will compete in a final Party ballot to replace May. Boris Johnson and Jeremy Hunt are the chosen ones. The Pound showed no reaction to the news. On Friday, the UK macroeconomic calendar will be scarce, with minor figures scheduled that can hardly make it to the price.

Heading into the Asian opening, the GBP/USD pair is trading at around the 1.2700 level, not far from a daily high of 1.2726. The short-term picture for the pair is bullish, given that in the 4 hours chart, it has settled above its 20 and 100 SMA, and with the shorter one gaining upward strength. The 200 SMA continues heading lower above the current level at around 1.2750, while the 1.2760 area is a more relevant static resistance, as the pair was unable to surpass it for the last three weeks. Technical indicators stand near their daily highs close to overbought readings, barely losing their strength upward, keeping the risk skewed to the upside.

Support levels: 1.2670 1.2630 1.2505

Resistance levels: 1.2725 1.2760 1.2800

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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