GBP/USD retreats from five-week top to sub-1.2600 area amid quiet session

  • GBP/USD snaps five-day winning streak to take U-turn from 100-day SMA, still above 1.2500.
  • The UK think tank warns services left out of Brexit trade talks, BOE’s Bailey tells banks to prepare for no-deal exit.
  • US Dollar bounces off three-month low amid risk reset, pre-ECB moves.
  • US Jobless Claims and UK Construction PMI could also offer intermediate direction.

Having risen for the five consecutive days, GBP/USD fades upside momentum while declining to 1.2543, down 0.24%, ahead of the London open on Thursday. In addition to the hard Brexit concerns and the coronavirus (COVID-19) news, the US dollar’s bounce from multi-day low also contributed to the pair’s pullback. While the markets are quiet during the pre-ECB moves, risk-tone also reshuffled despite the absence of any major catalysts.

The US dollar index (DXY) bounces back from the lowest since March to 97.48, up 0.16% on a day, by the press time. The reason could be traced from the early-day Newsmax interview by US President Donald Trump.

The Republican leader showed readiness to not use further militaries to tame the protests while also not announcing any sanctions on Chinese counterpart Xi Jinping. However, his upbeat comments concerning the US economy’s recovery seems to have put a bit under the US dollar.

On the other hand, Bloomberg cites the UK think tank while saying, “Britain’s dominant services industry is being left out of the country’s post-Brexit trade negotiations, putting a large part of the economy at risk of profound damage.” It should also be noted that the Sky News earlier spotted the BOE Governor Andrew Bailey asking major banks to prepare for no-deal Brexit.

Elsewhere, the UK is in talks with the rival of China’s Huawei for 5G networks after creating a spat with the Chinese company.

Concerning the virus, UK’s Business Secretary, Alok Sharma has been tested for the COVID-19 after feeling unwell during the House of Commons' appearance.

Against this backdrop, US 10-year Treasury yields dropped 2.2 basis points to 0.74% whereas stocks in the Asia Pacific also struggle for direction.

While the Brexit talks are likely not expected to offer any major positive signals, traders will keep eyes on the ECB’s expected stimulus as well as the UK Construction PMI, forecast 29.7 versus 8.2 prior, may limit the Cable’s immediate fall.

Technical analysis

Not only a 100-day SMA level of 1.2565, but the 1.2600 round-figure and April month top near 1.2645/50 could also keep the bulls chained. Alternatively, the early-May top near 1.2465/60 seems the immediate support to watch during further weakness.

Additional important levels

Today last price 1.2536
Today Daily Change -38 pips
Today Daily Change % -0.30%
Today daily open 1.2574
Daily SMA20 1.2305
Daily SMA50 1.237
Daily SMA100 1.2568
Daily SMA200 1.2673
Previous Daily High 1.2616
Previous Daily Low 1.2547
Previous Weekly High 1.2394
Previous Weekly Low 1.2164
Previous Monthly High 1.2601
Previous Monthly Low 1.2076
Daily Fibonacci 38.2% 1.2589
Daily Fibonacci 61.8% 1.2573
Daily Pivot Point S1 1.2542
Daily Pivot Point S2 1.251
Daily Pivot Point S3 1.2473
Daily Pivot Point R1 1.2611
Daily Pivot Point R2 1.2647
Daily Pivot Point R3 1.2679



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