GBP/USD laughs at risk aversion and hits two weeks highs above 1.2500

US dollar extends slide, DXY drops 1% to lowest in two weeks.
Rebound in Wall Street fades, Dow Jones falls by 1.10%.
GBP/USD rebounds sharply, back above the 20-day SMA.

Matías Salord FXStreet

The GBP/USD is rising on Thursday, making a full recovery from Wednesday’s slide even as the stock market stays in red and under pressure. The pair rose more than 150 pips from the daily low and recently hit 1.2512, the highest level since May 5.

Weaker greenback behind cable’s rally

A broad-based dollar weakness boosted GBP/USD. The DXY is falling by 1.05%, trading at two-week lows under 102.80 even as risk-off still remains in place. The FTSE 100 dropped 2.12% and in Wall Street, the Dow Jones falls 1.00%. The Nasdaq managed to climb to positive ground and gain 0.35%.

The demand for quality assets boosted government bonds. The US 10-year yield stands at 2.81%, significantly away from the 3% it reached on Wednesday. UK yields held in the recent range (10-year around 1.85%). The slide in yields weakened the dollar that is the worst performer in the G10 space on Thursday.

Economic data from the US showed Initial Jobless claims to the highest since January at 218K while Continuing Claims hit the lowest since 1970. The Philly Fed tumbled to 2.6 in May (against market consensus of 16). Existing Home Sales fell in April 2.4%. On Friday, the April Retail Sales report is due in the UK.

GBP/USD back above the 20-SMA

The rally in GBP/USD pushed the price back above the 20-day Simple Moving Average. The pound is having difficulties staying above 1.2500. A daily close clearly above would add support for an extension of the move to the upside.

A new failure here would expose again the 1.2330 low. Before that level, the 1.2400 zone offers interim support.

Technical levels

GBP/USD

Overview
Today last price	1.2419
Today Daily Change	-0.0074
Today Daily Change %	-0.59
Today daily open	1.2493

Trends
Daily SMA20	1.2517
Daily SMA50	1.2868
Daily SMA100	1.3188
Daily SMA200	1.3382

Levels
Previous Daily High	1.2499
Previous Daily Low	1.2316
Previous Weekly High	1.2406
Previous Weekly Low	1.2155
Previous Monthly High	1.3167
Previous Monthly Low	1.2411
Daily Fibonacci 38.2%	1.2429
Daily Fibonacci 61.8%	1.2386
Daily Pivot Point S1	1.2373
Daily Pivot Point S2	1.2253
Daily Pivot Point S3	1.2191
Daily Pivot Point R1	1.2556
Daily Pivot Point R2	1.2619
Daily Pivot Point R3	1.2739

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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