GBP/USD Forecast: Remains vulnerable, UK macro data eyed for bearish confirmation

The GBP/USD pair gained some intraday positive traction on Friday, albeit lacked any strong follow-through and failed just ahead of the 1.3100 round-figure mark. The intraday uptick lacked any obvious fundamental catalyst and largely shrugged off some follow-through US dollar appreciation, supported by the de-escalation of geopolitical tensions in the Middle East. Meanwhile, a weaker tone surrounding the US Treasury bond yields – further weighed down by disappointing US monthly jobs report – capped the attempted USD positive move and provided a minor lift to the pair.

GBP weighed down by a combination of factors

According to the official release, the US economy added 145K jobs in December as compared to 164K expected and worse than the previous month's downwardly revised reading of 256K (266K reported earlier). Moreover, average hourly earnings also fell short of market expectations and came in to show a modest 0.1% during the reported month. The yearly wage growth rate eased to 2.9% from 3.1% previous and added to the disappointment, which eventually exerted some downward pressure on the greenback.

However, concerns that Britain might crash out of the European Union at the end of this year held the GBP bulls from placing any aggressive bets. This coupled with the BoE Governor Mark Carney's dovish sounding comments on Thursday further collaborated towards capping the upside for the major, rather prompted some selling at higher levels. The pair finally ended the day in the red and opened with a modest bearish gap on the first day of a new trading week, losing ground for the fifth consecutive session. During the weekend, the BoE member Gertjan Vlieghe echoed Carney’s dovish messages last-week and exerted some additional downward pressure on the sterling.

Despite the downtick, the pair has still managed to hold its neck above the key 1.30 psychological mark as market participants now look forward to a slew of UK macro releases for a fresh impetus. The UK economic docket highlights the release of the November Industrial and Manufacturing Production figures. This coupled with the UK Trade Balance data for the same month, and monthly GDP estimate might further contribute towards producing some meaningful trading opportunities amid absent relevant market moving economic releases from the US.

Short-term technical outlook

From a technical perspective, nothing seems to have changed much for the pair and the near-term bias remains tilted in favour of bearish traders. This coupled with the fact that the pair has now found acceptance below the 23.6% Fibonacci level of the 1.3515-1.2905 recent downfall add credence to the negative outlook. Sustained weakness below the 1.30 handle will reaffirm the bearish bias and accelerate the slide further towards testing its next major support near the 1.2925 horizontal zone ahead of the 1.2900 round-figure mark.

On the flip side, the 1.3100 round-figure mark now seems to have emerged as immediate resistance. Any subsequent recovery might now confront some fresh supply and remain capped near the 1.3130-35 confluence resistance – comprising of 200-hour SMA and 38.2% Fibo. level. Having said that, a sustained break through the mentioned barrier might negate the bearish bias and lift the pair beyond the 1.3160 intermediate resistance towards reclaiming the 1.3200 round-figure mark (50% Fibo.). Some follow-through buying has the potential to extend the momentum back towards the mid-1.3200s en-route the recent swing high resistance near the 1.3285 region, which coincides with 61.8% Fibo. level.