GBP/USD: Bulls gathering pace for a test of 1.3600

The GBP/USD pair defended minor bids and hovered near the upper bound of the recent trading range near 1.3580 levels, with the bulls in search of fresh catalyst amid broad-based US dollar weakness.

GBP/USD: Buy the dips?

The spot is seen trying hard to extend yesterday’s rebound beyond the key resistances located just shy of the 1.36 handle, but the latest BRC retail sales data seems to keep further upside capped.

The latest data from the British Retail Consortium (BRC), which represents large chains, showed rising consumers prices lead the UK shoppers to cut back on almost everything other than food in the last three months of 2017, resulting in the biggest fall in non-grocery spending since 2009.

However, the downside remains cushioned amid a broadly weaker US dollar, in response to cautious Fedspeaks, which undermine the Fed rate hike expectations for this year. Also, the UK PM May’s cabinet reshuffle fuels fresh hopes of reaching a better Brexit deal, which could also offer some support to the pound.  

Valeria Bednarik, Chief Analyst at FXStreet, writes, “There are no macroeconomic events scheduled in the UK for this Tuesday, with the focus on Wednesday's industrial and manufacturing production, and trade balance, all for November.”

GBP/USD Technical Levels

Bednarik adds: “In the meantime, the pair presents a neutral short-term stance, trading now above a horizontal 20 SMA, and with technical indicators hovering around their mid-lines, with limited bearish strength. The pair has bottomed in the 1.3520 region also last week, making of the area the immediate support ahead of a stronger one at 1.3495, last week's low. Support levels: 1.3520 1.3495 1.3450 Resistance levels: 1.3575 1.3612 1.3655.”