- Broad US dollar weakness and better risk sentiment underpin the major.
- But Brexit-related jitters to cap further upside, as the focus shifts to US prelim GDP.
The downside consolidation in the US dollar has managed to keep the bid tone intact around the GBP/USD pair, as the bulls yearn for a break above the 1.2880 resistance for a sustained break higher.
Fed Chair Powell’s mildly dovish speech at the Jackson Hole Symposium has left the Dec rate hike in doubt, suggesting that the flattening of the US yield curve would be allowed to continue, which exerted bearish pressure on the US dollar. The Treasury yield curve reached its flattest level since 2007 on Friday
Meanwhile, the major also benefits from a better sentiment towards risk assets on the back of higher Asian equities, following record highs on Wall Street. However, markets remain wary over further upside amid a lack of fresh fundamental drivers and looming Brexit uncertainty, as the UK government readies for a no-Brexit deal.
The pair continue to look for fresh impetus from the sentiment on the global equities amid holiday-thinned trading and data-empty UK docket for today. The main event risk this week remains the US prelim GDP release due out on Wednesday.
GBP/USD Technical Levels
FXStreet’s Chief Analyst, Valeria Bednarik, notes: “The 4 hours chart for the GBP/USD pair indicates that the ongoing decline could continue In the daily chart, the pair is struggling also with a bearish 20 DMA, while technical indicators turned modestly higher, the Momentum stuck around its mid-line and the RSI currently at 45, also suggesting a limited upward potential. In the 4 hours chart, the risk is skewed to the downside, as the pair was unable to surpass a flat 20 SMA, the Momentum indicator turned lower within negative territory, as the RSI hovers directionless around its mid-line. Support levels: 1.2800 1.2770 1.2720. Resistance levels: 1.2900 1.2935 1.2960.”
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