- GBP/USD sellers look for entry below critical 21-DMA.
- Tuesday’s Doji suggests the bears could be losing conviction.
- Focus shifts to UK and US economic data.
GBP/USD is on the back foot around 1.3650 heading into the London open. The downside appears cushioned for Cable, thanks to the upbeat market mood and a broadly weaker US dollar.
Markets look forward to the UK Final Services PMI, US ADP jobs and ISM Services PMI data for fresh trading impetus. Also, in focus remains the developments around the Brexit issues and US stimulus talks.
Looking from a technical perspective, the bulls have managed to defend the critical 21-daily moving average (DMA), now at 1.3648, so far this Wednesday. The price breached the latter on Tuesday but recaptured it towards the closing.
Meanwhile, the Doji candlesticks formed on the daily chart a day before could be hinting towards sellers’ exhaustion, especially after a three-day bearish run.
Therefore, the GBP buyers remain hopeful so long as the price holds above the 21-DMA. The major could likely retest Tuesday’s high at 1.3710.
The Relative Strength Index (RSI) trades flat above the midline, near 52.10, which could offer some support to the bulls.
However, a daily closing below the 21-DMA could trigger a sharp sell-off towards the upward-sloping 50-DMA support at 1.3535. Note that the price hasn’t given a daily closing below the 21-DMA since January 11.
GBP/USD: Daily chart
GBP/USD: Additional levels
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