GBP/USD fails to extend gains above 1.3900, risk-off weighs
- DXY weakness helps Cable regain 1.3900, but for how long?
- Focus on UK’s Halifax and US jobs data for near-term impetus.
The GBP/USD pair stalled its Asian consolidation phase and broke to the upside in the early European trading, as the bulls fought back control amid fresh USD selling across the board.
However, the gains remain capped by persisting risk-off market profile, as markets refrain from placing bets on the higher-yielding/ risk currencies such as the GBP amid escalating trade war fears after the White House Gary Cohn resigned over Trump’s protectionism trade. Cohn is an advocate of open-market trades.
Later today, the spot is likely to be driven by the risk trends and USD dynamics amid a lack of first-tier macro news from the UK docket today while the speeches by the FOMC members Bostic and Dudley will be closely heard for fresh insights on the Fed’s interest rate outlook, in the wake of the recent US trade tariffs.
“On the economic data front, the UK economic docket features the release of Halifax HPI but is unlikely to influence the pair's momentum. From the US, ADP report on private sector employment might provide some short-term trading impetus later during the early NA session,” Haresh Menghani, Analyst at FXStreet notes.
GBP/USD levels to watch
Haresh adds, “a follow-through retracement back below 1.3860-50 immediate support would reinforce the not so bullish outlook and accelerate the fall back towards the 1.3800 handle en-route its next major support near the 1.3765 horizontal zone. On the upside, any meaningful up-move beyond the 1.3900 handle might continue to confront strong resistance at a short-term descending trend-line resistance, currently near the 1.3985-90 region. However, a convincing breakthrough the mentioned barrier would negate any near-term bearish bias and assist the pair to resume with its prior appreciating move.”