• GBP/USD corrected lower after advancing to a fresh monthly high above 1.2560.
  • The pair faces key technical support at 1.2520.
  • Profit-taking ahead of the weekend could limit Pound Sterling's gains.

GBP/USD gathered bullish momentum and climbed to its highest level since May 10 near 1.2570 early Friday. The pair stays in a consolidation phase during the European trading hours and edges lower. In the absence of fundamental drivers, market mood and week-end flows could drive the pair's action.

The US Dollar (USD) came under heavy selling pressure on Thursday after the US Department of Labor's weekly report revealed that Initial Jobless Claims rose to 261,000 in the week ending June 2 from 233,000 a week earlier, highlighting looser jobs market conditions.

As a result, the 10-year US Treasury bond yield retraced a large portion of the gains it recorded mid-week following the Bank of Canada's unexpected decision to raise its policy rate by 25 basis points. The US Dollar Index turned south and lost more than 0.7%, reflecting the negative impact of this data on the USD's performance, while Wall Street's main indexes closed decisively higher.

In the European session, US stock index futures trade mixed and the UK's FTSE posts small gains. Unless risk flows continue to dominate market action in the second half of the day, investors could refrain from betting on a persistent USD weakness ahead of next week's key inflation data and FOMC policy meeting, preventing GBP/USD to stretch higher.

Following Thursday's impressive upsurge, market participants could also look to book their profits, causing GBP/USD to extend its downward correction. 

GBP/USD Technical Analysis

On Thursday, GBP/USD surged above the 200-period Simple Moving Average (SMA) on the four-hour chart, located at 1.2480. During that action, the Relative Strength Index (RSI) indicator climbed to 70. Since the RSI holds comfortably above 60, the latest pullback suggests that the pair is making a technical correction, while remaining bullish.

On the upside, static resistance seems to have formed at 1.2560. Once that level turns into support, GBP/USD could target 1.2600 (psychological level, static level) and 1.2650 (beginning-point of the latest downtrend).

The 1.2520 threshold (static level, former resistance) aligns as first support. If that level fails, GBP/USD could stretch lower toward 1.2500 (psychological level) and 1.2480 (200-period SMA).

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD attracts some sellers below 0.6800 ahead of Chinese data

AUD/USD attracts some sellers below 0.6800 ahead of Chinese data

The AUD/USD pair trades on a weaker note around 0.6770, snapping the four-day winning streak during the early Asian session on Monday. The recovery of the US Dollar provides some support to the pair.

AUD/USD News

EUR/USD holds below 1.0900 as US political violence boosts US Dollar

EUR/USD holds below 1.0900 as US political violence boosts US Dollar

EUR/USD attracts some sellers around 1.0885 during the early Asian session on Monday. The major pair edges lower amid risk aversion, triggering a fresh bid of the US Dollar. The Eurozone May Industrial Production, July NY Empire State Manufacturing Index will be released on Monday, along with the Fed's Mary Daly speech. 

EUR/USD News

Gold edges lower near $2,400 on US Dollar rebounds

Gold edges lower near $2,400 on US Dollar rebounds

Gold price trades in negative territory near $2,405 on Monday during the early Asian session. The hotter-than-expected Wholesale price inflation in the United States for June weighs on the precious metal. 

Gold News

Shiba Inu erases losses from past week, eyes 18% gains

Shiba Inu erases losses from past week, eyes 18% gains

Shiba Inu traders are anticipating the roll-out of futures contracts, products like Exchange Traded Funds that could boost the asset’s utility. An IBC report shows the contract is expected to be listed post Monday, July 15.

Read more

Trump Assassination Attempt: Gold, stocks set to decline on Republican sweep speculation Premium

Trump Assassination Attempt: Gold, stocks set to decline on Republican sweep speculation

Fist in the air and on with the fight - that has been the historic picture that former President Donald Trump shortly after he survived an assassination attempt on his life. Trump was injured in his ear but seems to have come out stronger politically from the shocking political violence. 

Read more

Majors

Cryptocurrencies

Signatures