GBP/USD looks vulnerable, eyes 1.2750 on UK data

Dhwani Mehta FXStreet

The GBP/USD pair is on a gradual decline so far this Friday, now flirting with 1.28 handle, despite risk-on market profile.

The spot remains on the offers amid broad based US dollar consolidation near 3-day tops, after yesterday’s US treasury secretary Mnuchin’s comments inspired rally. Moreover, looming uncertainty over snap general elections announced by the British PM May earlier this week, also continues to undermine the sentiment around the GBP.

Additionally, the GBP markets remain disappointed as the BOE Governor Carney failed to offer any insights on central bank’s monetary policy path going forward. Meanwhile, losses seen in GBP/JPY cross amid renewed JPY demand, also collaborates to the weakness in cable.

In the day ahead, the main risk event for the major remains the UK retail sales data, which is expected to come in at -0.2% in March versus +1.4% seen last. A negative UK retail trade report is expected to accelerate the losses, knocking-off the rate below 5-DMA located at 1.2758.

Markets will also look forward to the US services and manufacturing PMI reports due later in the NA session for further momentum.

GBP/USD Levels to consider

Momentum above 1.2851 (Apr 20 high) could lift the pair above 1.2912 (flash rally high), beyond which a test of 1.2950 (psychological levels) is imminent. Conversely, a break below 1.2770 (Apr 20 low), leading to a subsequent break below 1.2758 (5-DMA) is likely to drag the pair towards testing its next support near 1.2730 (classic S2/ Fib S3).

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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