GBP/USD spikes to 3-day highs but again is rejected from above 1.2700

  • Cable rose to 1.2733 but failed to hold and retreat below 1.2700. 
  • Low volatility and calm prevail on Friday, ahead of an extraordinary weekend. 

The GBP/USD pair spiked to 1.2733, reaching the highest level since Tuesday but just like it happened over the last three days, failed to hold on top of 1.2700 and weakened, pulling back to the previous range.

The move could be attributed to end of month/quarter flows that could trigger price swings. Still, volatility remains low on Friday. Markets are awaiting the outcome of the G20 summit in Japan and the meeting between US President Trump and Chinese President Xi.  Markets appear to be on hold, on what kind of deal will be reached.

US data released today was ignored by market participants (personal income & spending and consumer confidence). The greenback is posting mix results on Friday, about to suffer the worst monthly performance since the beginning of the year, affected by Fed rate cut expectations.

In the UK, Brexit and politics continue to be the key driver. Brexit comments among politicians continue to hit the wires but for the moment, are not affecting Pound.

GBP/USD Technical outlook

Cable continues to offer no clear signals and to consolidate. The outlook remains unclear with the pair unable to break firmly above 1.2750. If it posts a daily close on top of 1.2750, the bias will point to more gains.

On the downside, the pair is standing above 1.2660, a critical support zone. It is the 20-day moving average and a horizontal level. A slide below would clear the way to more losses, exposing 1.2600 and also 1.2550.

The monthly chart offers some positive details for the Pound. It is the first gains after falling in the previous four and also that it is holding on top of 1.2600, making a rebound from the same area it did at the end of last year. The negative is that it remains skewed to the downside and the lack of signals of a potential rebound.

Source: fxstreet


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