- Manages to hold above 1.3100, but for how long?
- Letter of no confidence in PM May weighs heavily.
- A bearish start to a Big week ahead.
The GBP/USD pair reversed sharply from near one-week tops and witnessed a bearish 40-pips gap shortly after the Asian opening bells this Monday, as investors reacted to the weekend’s political headlines from the UK, with all eyes now on the Brexit issue again ahead of the key UK CPI and jobs data due later this week.
GBP/USD downside opening up towards 1.3040?
The spot stalled its sell-off just ahead of 1.31 handle, and now attempts a tepid recovery, as the dust settles over the weekend news piece published by The Times that reported on 40 members of the PM's Conservative party signing a letter of no confidence in Theresa May's leadership.
Moreover, the sentiment around the pound remains weighed by looming Brexit concerns, especially after the EU’s Chief Brexit negotiator, Barnier, noted that the EU needs an answer within two weeks on the Brexit financial settlement. Meanwhile, the latest report by Visa showed that the UK consumer spending dropped at the fastest annual pace seen in over four years, also collaborated to the weakness around the local currency.
It’s worth noting that the sterling was the top performer last week, having gained more than 200-pips on the back of hopes of further BOE rate hikes amid upbeat UK fundamentals after the UK industrial production and goods trade deficit data surprised markets to the upside. More so, broad-based US dollar weakness on the back of US tax reforms uncertainty also provided extra legs to the GBP/USD rally.
Markets now await a slew of critical macro releases from both the UK and the US due on the card in the week ahead for fresh trading impetus, as the headlines over the UK’s political climate will continue to drive the flow in Cable.
GBP/USD Technical View
Ross J Burland, Analyst at FXStreet, explained: “We had a recent rejection from the October high and the 50% retracement at 1.3338/43 level that is required daily close above to alleviate the bearish bias that was put in place since the same drop. On the flip-side, 1.3180 has been broken on this gap which now opens the 1.3027 level as the recent one month low. Further below lies that 1.2995 level and the 2016-2017 uptrend line that guards the 200-DMA at 1.2854, ahead of 1.2830 as a 38.2% retracement before the 1.2575 as a 50% retracement.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
USD/JPY holds near 155.50 after Tokyo CPI inflation eases more than expected
USD/JPY is trading tightly just below the 156.00 handle, hugging multi-year highs as the Yen continues to deflate. The pair is trading into 30-plus year highs, and bullish momentum is targeting all-time record bids beyond 160.00, a price level the pair hasn’t reached since 1990.
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Ethereum could remain inside key range as Consensys sues SEC over ETH security status
Ethereum appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after Consensys filed a lawsuit against the US SEC and insider sources informing Reuters of the unlikelihood of a spot ETH ETF approval in May.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.