GBP/USD rebounds stiffly into 1.2550, upside limited as sentiment remains half-cocked

Cable bolstered by post-drop market fade, but remains in bearish territory after Wednesday's declines.
With another US NFP in the barrel, action can be expected to remain constrained as long as market sentiment holds.

Joshua Gibson FXStreet

GBP/USD is trading into 1.2550 after an early Thursday plunge into 1.2396, and fx markets continue to recover from a risk-off shock fueled by thin volumes and concerned investors who pile into safe havens at every sign of a steepening global growth slowdown.

Apple Inc slashed their earnings expectations late Wednesday, blaming the reduced forecasts on China's worse-than-expected economic downturn, sending broader action into safe havens as traders pulled the plug, but with markets still volume-light in the post-Christmas and New Year's action, the downside volatility gave way to a steady fade move that is running out of steam heading into the London market session.

Construction PMIs for the UK will be dropping at 09:30 GMT today, expected to slow further from 53.4 to 52.9, with US ISM Manufacturing (forecast 58.0, last 60.7) and Prices Paid data (forecast 57.9, last 59,3) for December slated for 15:00 GMT, but many traders will either be sitting on the sidelines or buckling down ahead of Friday's US NFP data drop, which promises plenty of volatility to cap off an already twitchy trading week.

GBP/USD Levels to watch

Despite Thursday's steady fade action through the Asian market session, the Cable retains a bearish lean, according to FXStreet's own Valeria Bednarik:

Technically, the pair is at its lowest in over two weeks, bearish short-term, given that, in the 4 hours chart, it's back below its moving averages, with the 200 EMA turning lower at 1.2730 and the 20 SMA doing the same near 1.2680. The Momentum indicator in the mentioned chart heads lower in negative territory and at its lowest in over three weeks, while the RSI is trying to stabilize around 36, all of which keeps the risk leaned to the downside. The pair has given back the ground added in the previous two weeks, reflecting how concerned investors are on Brexit and how willing are to resume selling Pound at the slightest sign against it.

Support levels: 1.2580 1.2540 1.2510
Resistance levels: 1.2610 1.2650 1.2685

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

GBP/USD fills weekly bearish gap vs USD; upside seems capped amid UK political chaos

The GBP/USD pair climbs back to the 1.3235 region during the Asian session and fails the weekly bearish gap opening amid a modest US Dollar downtick, though the upside potential seems limited.

EUR/USD declines to near 1.1450 amid concerns over progress for US-Iran peace deal

The EUR/USD pair drifts lower to around 1.1460 during the early Asian session on Monday. Concerns about progress for the US-Iran peace deal and expectations of higher US interest rates boost a safe-haven currency such as the US Dollar against the Euro. European Central Bank President Christine Lagarde is set to speak later on Monday.

Gold clings to recovery gains near $4,200; US-Iran talks eyed

Gold has staged a solid rebound in the mid-Asian session on Monday, closing the bearish opening gap. The US Dollar pauses its upside amid renewed progress on the US-Iran peace talks after Qatar and Pakistan said that the US and Iran agreed to establish a de-confliction cell involving Lebanon, with mediator support to ensure termination compliance.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."

Bitcoin recovers, Ethereum clings to support, XRP consolidates

Bitcoin, Ethereum and Ripple begin the week on a steadier footing after correcting by nearly 4%, 2% and 6%, respectively, in the previous week. BTC is attempting a modest recovery, trading above $64,500 on Monday, while ETH continues to defend the crucial $1,700 support level.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.