GBP/USD Forecast: Seems vulnerable to retest weekly lows, around 1.2335 level
- GBP/USD lacked any firm direction and seesawed between tepid gains/minor losses on Thursday.
- The risk-off mood benefitted the safe-haven USD and kept a lid on the intraday positive move.
- Some stability in the equity markets helped the pair to edge higher on the last day of the week.
The GBP/USD pair had some good two-way price moves on Thursday and finally settled nearly unchanged for the day, forming an indecisive Doji candlestick on the daily chart. The pair managed to regain some intraday positive traction amid a positive turnaround in the European equity markets. The risk sentiment got a minor lift after the European Central Bank announced that it will offer loans against collateral to central banks outside the euro area.
However, growing market worries that a surge in new coronavirus cases could trigger fresh lockdown measures continued benefitting the US dollar's relative safe-haven status. This comes on the back of the overnight report that the US is considering to impose tariffs on $3.1 billion of imports from the United Kingdom and the EU. This coupled with persistent Brexit uncertainty kept a lid on any strong follow-through move up for the major.
Meanwhile, the greenback maintained its strong bid tone following the release of mixed US economic releases. Data released on Thursday showed that Durable Goods Orders recorded strong-than-expected growth in May, which largely negated a slight disappointment from the Initial Weekly Jobless Claims. Meanwhile, the final version of the GDP report confirmed that the US economy contracted by 5% annualized pace during the first quarter of 2020.
Sustained USD buying dragged the pair below the 1.2400 round-figure mark, albeit a late rebound in the US equity markets helped limit any deeper losses. The pair edged higher during the Asian session on Friday, though the upside is likely to remain limited amid absent relevant market moving economic releases from the UK. Later during the early North American session, investors might take cues from the US economic docket – featuring the release of Core PCE Price Index, Personal Income/Spending data and the final version of the June Michigan Consumer Sentiment Index.
Short-term technical outlook
From a technical perspective, the pair already seems to have found bearish acceptance below the 50% Fibonacci level of the 102076-1.2813 positive move. The overnight fall below the 1.2400 mark – though temporary – might have already set the stage for further near-term weakness. Hence, some follow-through weakness back towards weekly lows, around the 1.2335 area, now looks a distinct possibility. The latter coincides with 61.8% Fibo. level, which if broken should pave additional weakness towards the 1.2300 mark. The downward trajectory could further get extended towards the 1.2200 level en-route the next major support near the 1.2165-60 horizontal zone.
On the flip side, the 1.2440-50 region (50% Fibo. level) now seems to have emerged as an immediate resistance, above which the pair is likely to make a fresh attempt to reclaim the key 1.2500 psychological mark. This is closely followed by 38.2% Fibo. level, around the 1.2540 zone, coinciding with weekly tops set on Wednesday. A convincing breakthrough the mentioned barrier might be seen as a fresh trigger for bullish traders and set the stage for a move beyond the 1.2600 round-figure mark. The pair might then head towards testing 23.6% Fibo. level near the 1.2635 region.
Reprinted from FXStreet,the copyright all reserved by the original author.
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