- GBP/USD holds above 1.2550, struggles to build on Tuesday's gains.
- Sellers could retain control while 1.2590 resistance stays intact.
- US economic calendar will offer ADP Employment Change and ISM Services PMI data.
GBP/USD went into a consolidation phase above 1.2550 after closing modestly higher on Tuesday. The technical outlook is yet to point to a buildup of recovery momentum, while investors await data releases from the US.
The US Dollar (USD) came under modest selling pressure in the American trading hours on Tuesday and allowed GBP/USD to edge higher. Since there were no fundamental developments that may have caused the USD to lose interest, the pullback in the USD Index could be the product of a technical correction.
In the second half of the day, the ADP will release the private sector employment data for March. Investors expect private payrolls to rise 148K following February's 140K increase. A stronger-than-forecast reading could support the USD and weigh on the pair.
Later in the American session, the ISM Services PMI will also be looked upon for fresh impetus. A significant increase in the Prices Paid Index, the inflation component of the PMI survey, could revive concerns over services inflation remaining sticky and cause investors to reassess the probability of a policy pivot in June. According to the CME FedWatch Tool, there is a 37% chance of a 25 basis points rate cut in June.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) on the 4-hour chart stays below 50 and GBP/USD continues to trade within a descending regression channel, reflecting the bearish bias. More importantly, the pair closed below the 200-day Simple Moving Average, currently located at 1.2590.
On the downside, static support seems to have formed at 1.2540 before 1.2500 (psychological level, static level). In case GBP/USD manages to reclaim 1.2590, 1.2620 (upper limit of the descending channel, Fibonacci 23.6% retracement of the latest downtrend) and 1.2670 (Fibonacci 38.2% retracement) could be seen as next resistances.
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 turns positive and reaches 1.0300
The resurgence of the selling pressure in the US Dollar now motivates EUR/USD to regain some fresh traction and test the 1.0300 region on Thursday, as investors continue to warm up for Trump 2.0.
GBP/USD treads water around 1.2230
In quite an apathetic day in the FX galaxy, GBP/USD hovers around the 1.2230 area in a context of subdued price action in the Greenback and further correction in UK 10-year gilt yields.
Gold on its way to test record highs
Prices of Gold advances further and manage to reclaim the key $2,700 mark per ounce troy on Thursday in response to the absence of traction in the US Dollar and diminishing US yields across the board.
Bitcoin holds near $100K ahead of Donald Trump's inauguration
Bitcoin's price edges slightly lower and trades around $99,200 on Thursday after rallying 4% following the previous day’s US CPI release. Despite this recent rise in BTC prices, traders should keep watch on US Retail Sales data for December on Thursday, as it could provide more volatility.
Eurozone industrial production ticked up in November
The slight 0.2% rise in production from October is insufficient to indicate a reversal of the two-year downward trend. Overall, the outlook for industry remains quite weak at the start of the year.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.