GBP/USD defends 1.3700 amid damp mood, ahead of Powell

GBP/USD finds support near 1.3700 amid risk-off mood.
BOE hints at a potential rate hike, Brexit and Evergrande concerns loom.
Technical setup points to more weakness ahead.

Dhwani Mehta FXStreet

GBP/USD is fading the impressive rebound staged from the pivotal support, as it posts small losses this Friday.

At the time of writing, the cable is trading at 1.3733, down 0.06% on the day, hurt by the return of the risk-off trades, as uncertainty over the repayment of China Evergrande Group’s debt over the next month sags investors’ confidence.

Moreover, the US dollar attempts a bounce after the previous sharp declines, collaborating with the pullback in the spot. Adding to this, persistent Brexit concerns continue to limit the pound’s upside attempts.

In the latest Brexit update, the European Union (EU) fears that its citizens will be barred from flights to the UK due to the complex residency rules.

GBP/USD rallied hard on Thursday and tested the 1.3750 psychological barrier after the Bank of England (BOE) hinted at a growing case for rate lift-off as inflation will stay higher for a longer period. The UK central bank, however, kept its monetary policy settings unadjusted.

Attention now turns towards the UK CBI Realized Sales and Fed Chair Jerome Powell’s speech for fresh trading incentives.

GBP/USD: Technical outlook

Having faced rejection at 1.3750, GBP/USD has turned south but the bulls have managed to find support at 1.3700.

If the bulls regain poise, then a fresh advance towards the horizontal 21-Daily Moving Average (DMA) at 1.3772. However, the bulls will first need to clear Thursday’s high.

The 14-day Relative Strength Index (RSI) has turned flat below the midline, suggesting that the downside momentum could resume going forward.

A breach of the daily lows at 1.3697 could reinforce the bearish interests, opening floors towards the critical daily support line near 1.3610.

GBP/USD: Daily chart

GBP/USD: Additional levels to consider

GBP/USD

Overview
Today last price	1.3711
Today Daily Change	-0.0011
Today Daily Change %	-0.08
Today daily open	1.3721

Trends
Daily SMA20	1.3775
Daily SMA50	1.379
Daily SMA100	1.3903
Daily SMA200	1.3841

Levels
Previous Daily High	1.3751
Previous Daily Low	1.3613
Previous Weekly High	1.3913
Previous Weekly Low	1.3728
Previous Monthly High	1.3958
Previous Monthly Low	1.3602
Daily Fibonacci 38.2%	1.3698
Daily Fibonacci 61.8%	1.3665
Daily Pivot Point S1	1.3639
Daily Pivot Point S2	1.3557
Daily Pivot Point S3	1.3501
Daily Pivot Point R1	1.3777
Daily Pivot Point R2	1.3833
Daily Pivot Point R3	1.3915

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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