GBP/USD Outlook: Pound extends recovery ahead of key UK inflation data; overall picture remains bearish

Slobodan Drvenica Windsor Brokers

GBPUSD

Cable holds in green in early Wednesday’s trading and probes above 1.29 zone, following Tuesday’s bullish close which signaled bears may stay on hold.
The pair extends recovery despite previous day’s close below 100SMA (1.2889), with upticks so far seen as positioning for fresh weakness as situation over Brexit – pounds key driver – remains unclear and so far signaling that divorce without deal could be likely scenario.
Slight turn in momentum and stochastic supports corrective action but overall picture remains bearish as 20SMA turned sideways, while falling 10SMA made double-cross (10/200SMA death cross and 10/20SMA bear-cross), maintaining pressure.
Investors focus UK inflation data today, to get fresh signals.
Weaker than expected forecast (Jan CPI y/y 1.9% f/c vs 2.1% prev / Jan m/m -0.7% f/c vs 0.2% prev) adds to negative outlook, with downbeat release to bring sterling under fresh pressure.
Broken 200SMA marks pivotal barrier at 1.3020 and only firm break here would neutralize bears.

Res: 1.2922; 1.2963; 1.3000; 1.3020
Sup: 1.2889; 1.2832; 1.2807; 1.2786

Interested in GBPUSD technicals? Check out the key levels

1. R3 1.3003
2. R2 1.2957
3. R1 1.2926
PP 1.2879
1. S1 1.2849
2. S2 1.2802
3. S3 1.2771

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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