GBP/USD grasping at 1.33 as technicals still lean bearish

The GBP/USD is leaning tentatively bullish ahead of Thursday's London action, testing near the 1.3300 major level.

The Sterling is looking to extend its soft recovery, but the GBP remains deeply within bearish territory, after declining steadily from an April high of 1.4376 amidst a bout of disappointing economic data and a deflated Bank of England (BoE) that had to walk back their last rate hike, originally planned for early May, and now expected sometime in September.

Broader risk appetite recovered yesterday, after Italian political tensions left traders cautious and unenthusiastic for most of the week. With Italy looking set to avoid an immediate election call, risk appetite has recovered, and the Sterling is testing higher.

Thursday brings a smattering of data for the UK, kicking off with the Nationwide Housing Prices measure for the month of May dropping at 06:00 GMT, with the y/y figure expected to tick up slightly from 2.6% to 3.0%. Shortly after that, at 08:30 GMT, will be a mixed bag, with April's Consumer Credit (forecast £1.63 billion, prev. £0.254 billion), m/m Net Lending to Individuals (expected £5.2 billion, prev. £5.4 billion), and Mortgage Approvals for April, forecast at 63 thousand compared to the previous reading of 62.914 thousand, a very minor uptick.

GBP/USD levels to watch

The Sterling remains exposed to further selling, and as FXStreet's Chief Analyst Valeria Bednarik noted, "in the short term, the risk remains skewed to the downside as in the 4 hours chart, the pair is unable to surpass its 20 SMA, hovering a few pips below it, while technical indicators continue heading nowhere within negative territory. The pair is holding barely 80 pips away from its yearly low ahead of a fresh catalyst, but today's behavior has shown that a recovery doesn't depend on dollar's weakness but on Pound's possible strength."

Support levels: 1.3245 1.3200 1.3160  

Resistance levels: 1.3315 1.3350 1.3400