- GBP/USD underpinned by the latest UK political developments.
- A subdued USD demand supportive of the slightly positive mood.
The GBP/USD pair on Friday initially edged lower but managed to find decent support near the key 1.30 psychological mark and finally ended nearly unchanged for the day. The British pound remained well supported by the appointment of Rishi Sunak as the new Chancellor of the Exchequer, following an unexpected resignation from his predecessor Sajid Javid. Sunak is believed to be more aligned with the UK Prime Minister Boris Johnson's policy and favour fiscal stimulus, which forced investors to scale back their expectations for an immediate interest rate cut by the Bank of England and underpinned the sterling.
The intraday uptick of around 50 pips from daily lows was further supported by a subdued US dollar price action. Against the backdrop of some renewed weakness in the US Treasury bond yields, the USD Index eased farther from 4-1/2-month tops following the release of mixed US monthly retail sales data for January. This coupled with the fact that the US Industrial Production was down by 0.3% in January largely negated stronger Michigan Consumer Sentiment Index for February and did little to provide any fresh bullish impetus to the buck.
Despite the bounce, the pair remained below 50-day SMA resistance and held steady around mid-1.30000s through the Asian session on the first trading day of a new week. There isn't any major market moving UK economic data due for release on Monday and the US banks will remain closed in observance of Presidents' Day, leaving the pair at the mercy of any fresh Brexit-related headlines/developments. Apart from this, the release of the US employment details and the latest consumer inflation figures on Tuesday and Wednesday respectively, should provide a fresh impetus and influence the pair's near-term trajectory.
Short-term technical outlook
From a technical perspective, bulls are likely to wait for some follow-through buying beyond 50-day SMA before positioning for any further near-term appreciating move towards the 1.3100 round-figure mark. The positive momentum could further get extended towards testing the next major hurdle near the 1.3145-50 supply zone.
On the flip side, the key 1.30 mark might continue to protect the immediate downside, which if broken might prompt some technical selling and accelerate the slide further towards the 1.2950-45 support zone. Failure to defend the mentioned support might negate any near-term bullish bias and turn the pair vulnerable to head back towards challenging 100-day SMA support near the 1.2900 round-figure mark.
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