The bulls appear to face exhaustion after the Asian bounce, leaving the GBP/USD pair in a phase of consolidation sub-1.29 handle, as we progress towards the European opening bells.
GBP/USD eyes on 1.2930 – key resistance
Despite, widespread risk-aversion witnessed in the Asian trades, the GBP/USD stood resilient and embarked upon a tepid-recovery from a dip to 1.2864 lows. Risk-off sentiment drove the Asian markets today, as the overnight Barcelona ‘Terror Attack’ spooked investors.
The recovery in Cable was largely on the back of fresh selling seen in the US dollar against its main competitors, as the US political concerns continue to loom, with the latest CNN headlines reporting that the US President Donald Trump ends plans for his Council on Infrastructure
Further, the pound continues to cheer better-than expected UK retail sales data. The UK’s retail volumes came in at 0.3% in July m/m, while the annualized retail spending dropped sharply to 1.3%. Markets had estimated a 0.2% reading on a monthly basis; while a 1.4% print was expected on yearly basis.
Later today, the spot will remain at the mercy of persisting risk trend and sentiment around the greenback amid a data-empty UK docket. Meanwhile, the latest Bloomberg article citing that the BOE Carney is going off script with regard to plans for a rate hike, could keep the recovery in check ahead of the US data and Fedspeak.
GBP/USD levels to consider
Haresh Menghani, Analyst at FXStreet writes: “On daily chart, any attempted up-move beyond the 1.2900 handle is being sold into. Even if the pair is able to sustain above the mentioned hurdle, further up-move is likely to confront fresh supply near 1.2930 confluence resistance - comprising of 50-day SMA and 50% Fibonacci retracement level of 1.2589-1.3269 recent up-swing.”
“On the flip side, bears would be targeting for a decisive break below 1.2850-40 strong support (100-day SMA and 61.8% Fibonacci retracement level), which if broken would turn the pair vulnerable to extend its near-term corrective slide even below the 1.2800 handle towards its next support near 1.2775 area,” Haresh adds.
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