GBP/USD Forecast: Holding around 1.3700, bears cautious

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3701

The market’s mood deteriorated on the poor performance of Chinese equities.
US Federal Reserve Chief Jerome Powell will host an online event.
GBP/USD retreated from weekly highs, could extend its decline in the near term.

The greenback pared losses as the market’s optimism receded on the back of the poor performance of Chinese equities. The GBP/USD pair retreated from a weekly high at 1.3750, currently trading around the 13700 figure. The dollar strengthens particularly against commodity-linked currencies, while European rivals seem to be baring better with the downbeat mood. At the time being, European indexes post modest intraday losses, while US government bond yields retain gains at multi-month highs.

The macroeconomic calendar has nothing to offer this Friday, as the UK did not release macroeconomic figures, while the US will publish August New Home Sales. US Federal Reserve Chairman Jerome Powell will participate in an online event hosted by the central bank, although it seems quite unlikely that he will make fresh comments on monetary policy.

GBP/USD short-term technical outlook

The GBP/USD pair is trading again below the 61.8% retracement of its latest daily advance, which increases the risk of a downward extension in the near term. Still, it seems sellers remain side-lined. The 4-hour chart shows that the pair remains above a mildly bullish 20 SMA, which seems to be losing its bullish strength while holding below the longer ones. Meanwhile, technical indicators head south, although within positive levels. Bears will have chances if the pair falls below 1.3680, the immediate support level.

Support levels: 1.3680 1.3640 1.3600

Resistance levels: 1.3720 1.3760 1.3805

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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