GBP/USD dips towards 1.3550, slips under 21DMA as risk-off flows, weak UK data weigh


  • GBP/USD has fallen to fresh weekly lows in the 1.3550s and is now below its 21DMA.
  • Downbeat global risk appetite and weak UK data have weighed on the pair on Friday.

GBP/USD broke out to fresh weekly lows on Friday and has continued to press lower as the US trading session has gotten underway, with sterling succumbing to weak data and risk-off flows that are weighing broadly on risk-sensitive G10 currencies. At current levels just above the 1.3550 mark, GBP/USD now trades about 0.3% lower on the day, taking on the week losses to about 0.9%. With the latest drop having taken the pair back below the 21-day moving average for the first time since this time last month, the sterling bulls will be concerned that GBP’s near-term momentum has turned negative. The main area of support for cable traders to now keep an eye on is at the 1.3500 level.

Global equities tumbled on the final trading day of the week with traders citing the usual concerns about Fed tightening as well as week Netflix earnings, and this has dragged other risk assets (like commodities) and bond yields lower in tandem. This has hurt sentiment towards the more risk-sensitive currencies in the G10 such as sterling, which has also suffered after a larger than expected drop in Retail Sales in December. Data released by the UK’s ONS on Friday showed that headline Retail Sales dropped 3.7% MoM, much larger than expectations for a 0.6% MoM decline.

“The December retail sales report is unequivocally bad news, and it's reasonably clear that elevated price pressures in the goods sector contributed to the retrenchment in spending,” analysts at BMO said. Meanwhile, should next week’s Fed meeting match or exceed expectations regarding hawkishness, that could be a recipe for broad USD strength and for cable to incur further losses. A drop back to 1.3400, where the 50DMA resides, looks increasingly on the cards. Markets continue to price in a strong likelihood that the BoE hikes interest rates again at its next meeting, with BoE speak this week not doing anything to dampen such speculation, but the next meeting isn't until February 3 (just under two weeks away).

GBP/Usd

Overview
Today last price 1.3552
Today Daily Change -0.0037
Today Daily Change % -0.27
Today daily open 1.3589
 
Trends
Daily SMA20 1.3561
Daily SMA50 1.3416
Daily SMA100 1.3546
Daily SMA200 1.3734
 
Levels
Previous Daily High 1.3662
Previous Daily Low 1.3587
Previous Weekly High 1.3749
Previous Weekly Low 1.3532
Previous Monthly High 1.355
Previous Monthly Low 1.3161
Daily Fibonacci 38.2% 1.3616
Daily Fibonacci 61.8% 1.3633
Daily Pivot Point S1 1.3563
Daily Pivot Point S2 1.3538
Daily Pivot Point S3 1.3488
Daily Pivot Point R1 1.3638
Daily Pivot Point R2 1.3687
Daily Pivot Point R3 1.3713

 

 

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