GBP/USD bounces to 1.3955, risk-off weighs

Manages to keep the 1.39 handle amid broad USD weakness.
Tracks broad market sentiment in absence of fresh catalysts.

Dhwani Mehta FXStreet

The GBP/USD enjoyed good two-way trading so far this Friday, now moving away from the daily tops of 1.3955, as the bulls lacked vigour on its way up from 1.3912 lows.

The spot dropped sharply in the Asian trades after the US dollar extended its overnight rebound, supported by increased expectations of a Fed rate hike next week and upbeat US economic news.

However, Cable quickly recovered ground, as the sentiment around the greenback soured after the White House shake out news hit the wires and killed the USD corrective rally.

Over the last hour, the major eased back from higher levels, a cautious tone around the London stocks combined with a lack of fresh fundamental drivers adds to the weight on the pound.

Focus now shifts towards a fresh batch of the US economic releases, including the industrial production and consumer sentiment data, for fresh trading impetus, as investors readjust their positions ahead of the FOMC decision next week.

GBP/USD levels to watch

Karen Jones, Analyst at Commerzbank noted: “Support below the 55 day moving average at 1.3875 comes in along the five month uptrend line at 1.3795. Still further support can be seen between the February and the current March lows at 1.3765/12 and also at the 1.3658 September peak. If retested, we expect this support zone to hold. Should this not be the case, we would have to allow for the 2017-18 uptrend line at 1.3544 to be reached. Only a close below it would confirm the end of the medium term up move. Above the 1.4070 level there is scope for a retest of the 1.4345 January high and the 1.4299 200 week moving average”.

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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