GBP/USD retreats after a knee-jerk spike beyond 1.2300 handle

Haresh Menghani FXStreet

The post-Trump greenback slump helped the GBP/USD pair to build on Wednesday's sharp recovery move from 3-month lows and reclaim 1.2300 handle.

The pair jumped to a fresh weekly high level of 1.2317 before quickly retracing over 35-pips to currently trade around 1.2280 region. After today's follow through action, the pair recovered over 250-pips from yesterday's multi-month lows amid intense selling pressure around the US Dollar after Wednesday's press conference, by the US President-elect Donald Trump, failed to reinforce investors’ expectation of stronger US economic growth.

The disappointment triggered a sharp greenback sell-off and the long-dollar unwinding pressure extended during early European session on Thursday. Further up-move, however, was restricted near 1.2315 resistance area marking 38.2% Fibonacci retracement level of 1.2775-1.2038 recent downslide.

A slew of Fed speakers, including the Fed Chair Janet Yellen, would turn focus to the central bank's monetary policy outlook and provide fresh impetus for the US Dollar's next leg of directional move.

Technical levels to watch

A follow through buying interest above 1.2315 resistance has the potential to continue boosting the pair further towards its next resistance near 1.2380-85 region above which the pair is likely to make a fresh attempt towards reclaiming 1.2400 handle and head towards retesting 50-day SMA strong resistance near 1.2425-30 region.

On the downside, 1.2270 area now becomes immediate support to defend, which if broken is likely to drag the pair back towards 1.2215 support area before eventually dropping 1.2160-50 horizontal support.

1 Week
1 Month
1 Quarter

1 Week

Avg Forecast 1.2306

30% Bullish
30% Bearish
40% Sideways

Bias Sideways

1 Month

Avg Forecast 1.2237

27% Bullish
60% Bearish
13% Sideways

Bias Bearish

1 Quarter

Avg Forecast 1.2098

5% Bullish
58% Bearish
37% Sideways

Bias Bearish

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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