- GBP/USD has staged a downward correction toward 1.2300.
- Risk flows could limit USD's recovery gains on Wednesday.
- Consumer Credit in the UK declined less than expected in February.
After having met resistance at 1.2350, GBP/USD has lost its traction and retreated to the 1.2300 area early Wednesday. The near-term technical outlook points to a loss of bullish momentum and the pair could stay in a consolidation phase in the absence of fundamental drivers.
The data published by the Bank of England showed on Wednesday that Consumer Credit declined to £1.413 billion in February from £1.686 billion in January. Although this reading came in higher than the market expectation of £1.3 billion, it failed to help Pound Sterling regain its traction.
In the second half of the day, Pending Home Sales for February, which are forecast to decline by 3% following January's surprising 8.1% increase, will be looked upon for fresh impetus. A larger-than-forecast decline could hurt the USD and vice versa but the market reaction to this low-tier data is likely to remain short-lived.
Meanwhile, US stock index futures trade in positive territory following Wall Street's uninspiring action on Tuesday. A rebound in major US indices could limit the US Dollar's recovery gains and support GBP/USD in the American session. On the other hand, the pair is likely to come under bearish pressure if there is a negative shift in risk mood.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart declined toward 60 and GBP/USD is trading near the lower-limit of the ascending regression channel, pointing to a loss of bullish momentum. Nevertheless, the recent action doesn't suggest that sellers are showing interest either. Hence, the pair could move sideways in the short term.
On the downside, 1.2300 (psychological level, static level, lower limit of the ascending channel) aligns as key support. In case GBP/USD falls below that level and starts using it resistance, 1.2260 (50-period Simple Moving Average (SMA) on the four-hour chart) could be seen as the next support below 1.2230 (static level).
Following Tuesday's action, resistance seems to have formed at 1.2350. Above that level, the mid-point of the ascending channel aligns as next hurdle at 1.2370 before the pair can target 1.2400 (psychological level, static level).
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
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.