GBP/USD muted near 1.25, targeting critical support near 100-DMA

Currently, GBP/USD is trading at 1.2514, down -0.31% or (39)-pips on the day, having posted a daily high at 1.2569 and low at 1.2497.

The British pound vs. American dollar had been trading above water as the ongoing political uncertainty in the US linked to Trump's Agenda seems to favor risk-on trades. Furthermore, there is evidence to be 'cautiously optimistic' no matter how friendly negotiations between the EU and PM May could develop as different businesses in the UK are facing immediate pressure, for example as Ben Chapman at Independent reported when quoting Ufi Ibrahim, chief executive of the British Hospitality Associations, “People don’t want to pack up their lives and move to the UK if they could end up having to go back again very soon. It’s not only waiters and bartenders who are put off. Even top chefs are turning down jobs in London."

On the data front, the UK economic docket had BBA Mortage Approvals that clocked 'a better than expected' figure at 44.657K against 41.9k consensus and 43.581K previous. Later, the US dollar would face New Home Sales (MoM) and Michigan Consumer Sentiment Index if both figures print better than expected results the greenback could experience extra strength at least during the NA trading session.

GBP/USD bullish above 1.2610/15 – UOB

Historical data available for traders and investors indicates during the last 8-weeks that GBP/USD pair, also known as the Cable, had the best trading day at +3.01% (Jan.17) or 373-pips, and the worst at -1.19% (Jan.18) or 146-pips. Furthermore, the US 10yr treasury yields have traded from 2.38% to 2.33%, down -1.50% on the day at 2.33% or -0.0355.

Technical levels to consider

In terms of technical levels, upside barriers are aligned at 1.2581 (high Feb.9), then at 1.2705 (high Feb.2) and above that at 1.2777 (high Dec.6). While supports are aligned at 1.2345 (low Feb.7), later at 1.2260 (low Jan.20) and finally below that at 1.2010 (Jan.17). On the other hand, Stochastic Oscillator (5,3,3) seems to change course to head north. Therefore, there is evidence to expect further British Pound gains in the near term.

On the long term view, if 1.1985 (low Jan.16) is in fact, a short-term bottom, the upside runs all the way towards 1.3210 (short-term 23.6% Fib). However, without removing the 'hard' dark cloud from all Brexit negotiations, the sterling faces a gargantuan resistance level against 1.3978 (short-term 38.2% Fib) and 1.4153 (long-term 23.6% Fib).

GBP/USD Forecast: consolidating at highs