GBP/USD Forecast: Remains vulnerable to test sub-1.2800 level, US macro data eyed for some impetus

Haresh Menghani FXStreet

The GBP/USD pair added to the overnight slide below the very important 200-day SMA and dropped to fresh two-month lows on Wednesday. The British Pound remained depressed in wake of the recent reports about attempts to oust the UK PM Theresa May and was further weighed down by the latest development, wherein the talks between the ruling Conservative Party and the opposition Labour Party were said to be close to collapsing. This coupled with a strong follow-through US Dollar rally, rising to its highest level since June 2017, further collaborated to the pair's intraday slide amid absent relevant market moving economic releases.

The pair touched an intraday low level of 1.2888, though the bearish pressure eased a bit after the 1922 Committee rejected a rule change, which would allow a new procedure to oust PM May, and news that May could put forward Brexit deal for a vote in the parliament sometime during next week. The pair now seems to have stabilized near the 1.2900 handle as investors await fresh Brexit-related news/developments before positioning for the next leg of a directional move. Later during the early North-American session, the release of US durable goods orders data will influence the USD price dynamics and further collaborate towards producing some meaningful trading opportunities.

From a technical perspective, the pair now seems to have found some support near 50% Fibonacci retracement level of the 1.2396-1.3381 up-move. However, given the recent bearish break below a short-term ascending trend-channel, descending triangle and 200-DMA, any attempted bounce seems more likely to run into some fresh supply near the mentioned support break-point around the 1.2965-70 region. Meanwhile, bears are likely to wait for a convincing break through the mentioned support, below which the pair is likely to accelerate the slide and aim towards testing sub-1.2800 level - (1.2775 support marked by 61.8% Fibonacci retracement level).

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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