GBP/USD Forecast: move beyond 1.29 seems possible until holds above 1.2770 support

Haresh Menghani FXStreet

The GBP/USD pair had an uneventful trading activity over the past 24-hrs and oscillated within a narrow band around the 1.2800 handle. The pair is now finding it difficult to move back above mid-1.2800s, while immediate downside remains protected by the 1.2775-70 horizontal area.

On the economic data front, the pair had a muted reaction to a larger-than-expected drop in the UK monthly retail sales figure. The total value of sales at the retail level dropped 1.8% m-o-m during March, taking the annualized growth sharply lower to 1.7%. Market participants estimated a -0.2% monthly drop, while yearly reading was expected to slow to a 3.4% from 3.7% previous. Today's disappointing retail sales clearly suggests that higher inflation is squeezing consumer spending. Inflation led weaker sales growth could result into more hawkish BoE stance and hence, has failed to attract any fresh selling pressure around the British Pound.

The pair's price-action over the past couple of trading sessions could be categorized as consolidative phase, especially after strong intraday gains following the UK PM Theresa May's announcement to call for a snap election on June 8th.

Meanwhile, with short-term technical indicators have cooled off from near-term overbought conditions, the pair seems all set to resume its appreciating move. The bullish bias would be confirmed once it breaks through 1.2850-60 immediate hurdle, above which the pair seems all set to head back towards the 1.2900 handle, representing 61.8% Fibonacci retracement level of 1.3445-1.1980 downslide. A follow through buying interest has the potential to continue boosting the pair further towards 1.2955-60 intermediate resistance ahead of the key 1.30 psychological mark.

On the flip side, sustained break below 1.2775-70 immediate support might negate near-term bullish bias and turn the pair vulnerable to aim towards testing 38.2% Fibonacci retracement level support of the recent up-move, near the 1.2700 handle.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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