The GBP/USD pair clocked an intraday high of 1.5789 on Monday, but failed to take out the resistance at 1.5749 (23.6% Fib R of 1.5169-1.5928) on closing basis for the fourth consecutive session. The pair was largely guided by the movement in the EUR/GBP cross throughout the day. The EUR shot higher on verbal assurances about Greek deal from the EU bigwigs. Consequently, an uptick in the EUR/GBP restricted the gains in the GBP/USD throughout the European session. The cable did clock a high of 1.5789, but once again the USD recovered to ensure the daily close at 1.5727.
The Greek impasse is likely to keep the pair under pressure. The UK final 1Q Gross Domestic Product (GDP) (expected 2.5%, previous 2.4%) due tomorrow may heighten expectations of an interest rate hike. However, the pair may not be able to witness a daily close above 1.5749 due to the Greece issue and strong non-farm payrolls expectations (230K). Still an intraday rally to 1.5790 cannot be ruled out in case of a strong UK GDP.
At the moment, the pair is trading at 1.5728. Given the repeated failure to take out 1.5749 on closing basis, the pair could re-test the support at 1.5667. The pair was also rejected at its hourly 50-MA in the North American session, which was followed by a bearish daily close below 1.5749. Fresh offers are likely to hit the pair in the early European session, taking it to 1.57-1.5667 levels. A break below 1.5667 could push the pair down to 1.5606 (23.6% Fib R of 1.4564-1.5928). On the other hand, a break above 1.5749 could see the pair re-test 1.5790-1.5800.
EUR/USD Analysis: Eyes 1.1330 after filling Monday’s gap down opening
The single currency opened sharply lower on Monday and fell to a low of 1.0953 in New Zealand due to Greek talks failed, however, the pair witnessed short-covering and then extended the recovery in the European and US session on account of verbal assurance from the EU officials. Euro later rose to as high as 1.1278 before closing at 1.1218. The euro was also supported by intervention from the Swiss National Bank, which is buying EUR/CHF to actively weaken the Swiss Franc.
As per the latest reports, Greece rejected a last minute opportunity to reach a new bailout deal with its creditors ahead of Tuesday's IMF payment deadline. Consequently, the pair fell below 1.12 levels in the Asian session.
At the moment, the pair is trading at 1.1190 (50-DMA). The spot filled the entire gap down opening witnessed in the early Asian session on Monday. Consequently, a break below the 50-DMA could trigger another sell-off to 1.1130 (June 26 low). A break below the same could push the pair down to 1.1082-1.1050. On the other hand, a break above 1.1293 (23.6% Fib R of 1.3991-1.0461) would open doors for a re-test of 1.1350. However, the move towards 1.1293 is unlikely as – Greece likely to default today, the SNB may remain on the sidelines after having intervened on Monday. Thus, a downside move to 1.1130 is more likely today.
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