GBP/USD stages solid comeback, re-takes 1.4150

DXY rebound loses steam.
Brexit jitters negate upbeat UK fundamentals
Dovish BOE Carney’s comments weigh.

Dhwani Mehta FXStreet

Fresh bids emerged just ahead of the 1.41 handle, prompting a solid recovery in the GBP/USD pair, as the bulls look to regain the mid-1.41 barrier amid stalled rebound seen in the US dollar against its major peers.

The broad-based US dollar rebound ran out of legs over the last hour, as markets continue to weigh a weaker US Q4 GDP report, shrugging-off the rise in Treasury yields across the curve. The USD index failed above the 89 handle and eased to now trade +0.10% higher at 88.95.

On the GBP-side of the story, despite the recovery, it remains to be seen if the GBP bulls can sustain it, as the EU is due on Monday to approve criteria for negotiating a transition period that would bridge Brexit in March 2019 and the start of new trading terms. Meanwhile, comments from the BOE Governor Carney at Davos last Friday could also keep a check on the upside.

Looking ahead, “The week ahead will be a busy one and will once again be focused on the beleaguered US dollar. Dominating the schedule will be the first FOMC meeting of the year concluding on Wednesday, followed by the monthly US jobs report on Friday. Thursday brings both US and UK manufacturing PMI data, and Friday highlights not only the US jobs report (focusing on non-farm payrolls, the unemployment rate, and wage growth) but also the UK’s construction PMI data,” James Chen at Forex.com, wrote.

GBP/USD Technical Levels

According to Valeria Bednarik, Chief Analyst at FXStreet, “The pair has reached extreme overbought conditions in the daily chart a couple of weeks ago, and the latest retracement from the mentioned multi-year high has barely changed the course of technical indicators, which remain at extreme levels and with no signs of easing. In the same chart, the pair is far above all of its moving averages, with the 20 DMA some 400 pips below the current level.”

“In the 4 hours chart, the pair settled right below a bullish 20 SMA, the Momentum indicator entered negative territory with a strong downward slope, while the RSI consolidates around 54, all of which favors a downward corrective movement that should accelerate on a break below 1.4080, Thursday's low,” Valeria adds.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.