The British Pound strengthened across the board on Thursday, with the GBP/USD pair surging to its strongest level in two-weeks after stellar UK monthly retail sales data eased fears of economic fallout following UK’s decision to end its membership with the European Union. The pair extended its up-move to 1.3200 neighborhood during early Asian session on Friday before retracing from highs to currently trade with slight negative bias around mid-1.3100s.
Meanwhile, the greenback remained under selling pressure after the minutes from FOMC July monetary policy meeting failed to provide any clues on the timing on next Fed rate-hike decision. Amid broad based US Dollar selling, the EUR/USD pair touched a fresh post-Brexit high level of 1.1366 and now seems headed for a third weekly gains in the previous four.
Friday's only release from the UK, public sector net borrowing, would be a non-market-moving event and hence, today's moves in the FX market would be solely driven by broader sentiment surrounding the greenback.
Technical outlook
GBP/USD
Thursday’s momentum assisted the pair to conquer an important confluence resistance near 1.3115 level, comprising of 200-SMA (4-hourly) and 50% Fibonacci retracement level of 1.3372-1.2866 recent downslide, which now seems to protect immediate downside. Failure to hold this resistance turned immediate support should extend the corrective move towards 1.3100 handle and any further weakness below 1.3100 mark is likely to be limited and might be bought into near 1.3060-55 strong support marking 38.2% Fibonacci retracement level.
Meanwhile on the upside, 61.8% Fibonacci retracement level near 1.3175-80 zone is acting as immediate hurdle, which if cleared should continue boosting the pair further towards 1.3255-60 horizontal resistance before the pair darts towards reclaiming 1.3300 level and head back to monthly high resistance near 1.3350-70 region.
EUR/USD
On 1-hourly chart, the pair is seen oscillating within a short-term ascending trend-channel and is now retracing from channel resistance. From current levels, further retracement is likely to find support at 50-hourly SMA near 1.1300 round figure mark. A follow through pull-back seems to extend the corrective move towards the ascending trend-channel support near 1.1250-45 area. Only a decisive break below this important support would negate prospects of any further up-move for the pair and turn it vulnerable to extend its downslide in the near-term.
Meanwhile on the upside, 1.1370-75 region (trend-channel resistance) remains immediate hurdle, which if cleared should lift the pair to pre-Brexit swing high resistance near 1.1425-30 region. Sustained momentum above 1.1400 handle could further get extended towards 1.1500 psychological mark before retesting early May daily closing high resistance near 1.1530-35 area.
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Editors’ Picks
EUR/USD remains below 1.1850 after US data
EUR/USD struggles to gain traction and trades in a narrow range below 1.1850 on Wednesday. The US Dollar stays resilient against its rivals following the better-than-expected Durable Goods Orders and housing data, limiting the pair's upside ahead of FOMC Minutes.
GBP/USD stays in narrow channel above 1.3550 ahead of FOMC Minutes
GBP/USD holds its ground following Tuesday's slide and moves sideways above 1.3550 midweek. Although the data from the UK confirmed that inflation cooled in January, the positive shift seen in market mood helps the pair keep its footing as investors wait for the Fed to publish the minnutes of the January policy meeting.
USD/JPY holds gains near 154.00 ahead of the Fed’s minutes
USD/JPY retraces Tuesday's losses and returns near weekly highs in the area of 154.00. The US Dollar trims losses in quiet markets with all eyes on the Fed's minutes. Weak Japanese GDP data resurfaced concerns about Japan's fiscal stability and halted JPY's recovery.
Editors’ Picks
EUR/USD remains below 1.1850 after US data
EUR/USD struggles to gain traction and trades in a narrow range below 1.1850 on Wednesday. The US Dollar stays resilient against its rivals following the better-than-expected Durable Goods Orders and housing data, limiting the pair's upside ahead of FOMC Minutes.
GBP/USD stays in narrow channel above 1.3550 ahead of FOMC Minutes
GBP/USD holds its ground following Tuesday's slide and moves sideways above 1.3550 midweek. Although the data from the UK confirmed that inflation cooled in January, the positive shift seen in market mood helps the pair keep its footing as investors wait for the Fed to publish the minnutes of the January policy meeting.
Gold regains some shine, retargets $5,000 ahead of FOMC Minutes
Gold gathers fresh upside traction on Wednesday, leaving part of the weakness seen at the beginning of the week and refocusing its attention to the key $5,000 mark per troy ounce, all ahead of the release of the FOMC Minutes and despite the modest uptick in the US Dollar.
Fed Minutes to shed light on January hold decision amid hawkish rate outlook
The Minutes of the Fed’s January 27-28 monetary policy meeting will be published today. Details of discussions on the decision to leave the policy rate unchanged will be scrutinized by investors.
Mixed UK inflation data no gamechanger for the Bank of England
Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.
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