GBP/USD fades a spike to 1.3230, USD recovers ground
- 5-DMA support at 1.3192 hold the upside bias
- US PMIs next on tap
The Asian recovery in GBP/USD ran into offers at key resistance near 1.3230 region, allowing a phase of upside consolidation in the spot, mainly in response a minor bounce staged by the US dollar versus its main competitors.
GBP/USD: Focus shifts to US PMIs, UK prelim GDP
The spot sticks to recovery gains above 1.32 handle, having found fresh support once again near 5-DMA at 1.3192, although further upside appears to lack follow-through amid renewed buying interest seen around the greenback across the board. The US dollar recovers losses in sync with the US rates, as attention remains on the Fed’s leadership announcement.
However, the retreat in the major remains capped by the cross-driven play, with the GBP/JPY cross inching higher to 150 mark on the back of fresh USD/JPY buying. Cable also continues to find support from the UK PM May’s optimistic remarks on the Brexit negotiations delivered a day before, while EU Chief Brexit negotiator Barnier’s comments also help keep the buoyant tone intact around the pound.
All eyes now remain on the US flash manufacturing and services PMI releases due later in the NA session, in absence of any other relevant macro news from both the UK and US.
GBP/USD Technical View
Haresh Menghani, Analyst at FXStreet, writes: “Technically, a follow through buying interest below 1.3230 level has the potential to lift the pair back towards the 1.3270-75 resistance area, marking 38.2% Fibonacci retracement level of 1.3657-1.3027 recent downfall. Momentum beyond the mentioned hurdle could get extended even beyond the 1.3300 handle towards 50% Fibonacci retracement level resistance near the 1.3345-50 region.”
“On the flip side, weakness back below the 1.3200 handle now seems to find support at 23.6% Fibonacci retracement level, around 1.3175 area, ahead of 1.3150 horizontal level. A convincing break below the mentioned support would turn the pair vulnerable to break below the 1.3100 handle and head towards testing 100-day SMA support near mid-1.3000s,” Haresh adds.