GBP/USD slides further below 1.3700, refreshes session lows post-UK macro data

GBP/USD edged lower on Friday and eroded a part of the overnight gains to near three-year tops.
Indications that UK lockdowns could be extended, downbeat UK macro data weighed on the GBP.
A modest pullback in the equity markets benefitted the safe-haven USD and added to the selling.

Haresh Menghani FXStreet

The GBP/USD pair lost some additional ground in reaction to downbeat UK macro data and dropped to fresh session lows, around the 1.3675-70 region in the last hour.

The pair witnessed some selling on the last trading day of the week and eroded a part of the previous session's strong positive move to the highest level since May 2018. The British pound was weighed down by indications that lockdown restrictions will be extended in the UK and weakened further following the release of UK Retail Sales data.

In fact, the headline figures recorded a modest growth of 0.3% MoM in December, while core sales (stripping the auto motor fuel sales) stood at 0.4% MoM. This marked a notable rebound from sharp contraction recorded in November but the readings were well short of market expectations and exerted some additional pressure on the sterling.

Apart from this, the GBP/USD pair was further pressured by a modest pickup in the US dollar demand amid a modest pullback in the equity markets. The imposition of fresh lockdowns in China prompted investors to take some profits off the table following the recent strong rally, led by hopes for additional US fiscal stimulus measures.

Investors have been pricing in the prospects for a massive US fiscal spending in 2021 under Joe Biden's presidency. This, along with the optimism over the rollout of vaccines for the highly contagious coronavirus disease, has been fueling expectations for a strong economic recovery and boosting investors confidence.

The underlying bullish sentiment, in turn, might keep a lid on any meaningful recovery for the greenback and help limit the downside for the GBP/USD pair. This makes it prudent to wait for some strong follow-through selling before confirming that the pair has topped out in the near-term and positioning for any further corrective slide.

Market participants now look forward to the release of the flash version of the UK PMI prints for January. A weaker than expected reading will add to the market worries about the UK economic growth at the start of 2021 and prompt some fresh selling around the GBP/USD pair, paving the way for an extension of the intraday corrective slide.

Technical levels to watch

GBP/USD

Overview
Today last price	1.3678
Today Daily Change	-0.0060
Today Daily Change %	-0.44
Today daily open	1.3738

Trends
Daily SMA20	1.3605
Daily SMA50	1.3463
Daily SMA100	1.3216
Daily SMA200	1.2936

Levels
Previous Daily High	1.3746
Previous Daily Low	1.3652
Previous Weekly High	1.371
Previous Weekly Low	1.3451
Previous Monthly High	1.3686
Previous Monthly Low	1.3134
Daily Fibonacci 38.2%	1.371
Daily Fibonacci 61.8%	1.3688
Daily Pivot Point S1	1.3678
Daily Pivot Point S2	1.3618
Daily Pivot Point S3	1.3584
Daily Pivot Point R1	1.3772
Daily Pivot Point R2	1.3806
Daily Pivot Point R3	1.3866

Author

Haresh Menghani

FXStreet

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

EUR/USD stays well offered below 1.1800

The selling pressure on EUR/USD is picking up pace, with the pair slipping decisively below the key 1.1800 level and sliding to fresh two week lows as Wednesday’s session draws to a close. The move lower comes as the US Dollar finds renewed strength after the latest round of US data and the release of the FOMC Minutes. Next of note on the docket will be the US weekly Initial Jobless Claims.

GBP/USD reaches multi-day lows near 1.3500

GBP/USD reverses its initial upside momentum and is now adding to previous declines, approaching the 1.3500 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs near the $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Bitcoin has found or is near a bottom, extended consolidation to follow: K33

Bitcoin (BTC) is nearing or has already established a bottom, which could be followed by a sustained period of slow price movement, according to K33.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.