GBP/USD slips below 1.3100 handle, fresh session lows ahead of FOMC

Haresh Menghani FXStreet

• A strong follow-through USD recovery exerts prompts some profit-taking.
• Investors also seemed to have fully digested the recent Brexith optimism.
• Traders now look forward to the latest FOMC policy decision for fresh impetus.

The GBP/USD pair finally broke down of its Asian/early European session consolidation phase and broke below the 1.3100 handle in the last hour, erasing previous session's up-move to three-week tops.

After an initial uptick to mid-1.3100s, the pair met with some fresh supply and snapped three consecutive days of winning streak amid a strong follow-through US Dollar buying interest. Investors looked past the US midterm election results and the greenback recovered further from 2-1/2 week lows, which was eventually seen as one of the key factors prompting fresh selling around the major.

Meanwhile, market participants also seemed to have digested the latest Brexit optimism, with a report, via the Sun, saying that the UK PM May could ask for more time to cut a Brexit deal with Cabinet, exerting some additional downward pressure on the British Pound.

In the latest Brexit-related news, via Reuters - citing a government source, the UK Cabinet meeting on Brexit seems unlikely to take place ahead of next week and cast fresh doubt over the sticking point of Irish backstop.

In addition to this, traders also seemed inclined to lighten their bullish positions ahead of today's key event risk - the latest FOMC monetary policy update, and especially after the recent upsurge of over 450-pips from sub-1.2700 level touched on Oct. 31.

Technical levels to watch

A subsequent fall below overnight swing low level of 1.3073 is likely to accelerate the slide back towards 50/100-day SMA confluence support near the 1.3035-30 region before the pair eventually drops to the key 1.30 psychological mark.

On the flip side, the 1.3125 level now becomes an immediate hurdle, above which the pair is likely to surpass the 1.3175-80 supply zone and aim towards reclaiming the 1.3200 en-route its next major hurdle near the 1.3220-25 region.

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 eases marginally, back to 1.1800

EUR/USD navigates a narrow range on Thursday, hovering around the 1.1800 neighbourhood in a context of humble gains in the US Dollar. The pair’s lacklustre performance come amid the unabated trade uncertainty, geopolitical tensions in the Middle East and the cautious tone from the ECB’s Lagarde.

GBP/USD retreats from tops, approaching 1.3540

GBP/USD partially sets aside Wednesday’s strong advance and recedes to the 1.3540 region on Thursday. Cable’s modest retracement follows the equally acceptable gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold clings to gains just below $5,200, focus on geopolitics

Gold is edging modestly higher on Thursday, adding to Wednesday’s uptick and holding just below the $5,200 mark per troy ounce against the backdrop of modest gains in the US Dollar. In the meantime, attention is turning to the geopolitical scenario following US-Iran nuclear talks.