GBP/USD: Vulnerable below 100-DMA support, UK GDP eyed
- USD supported on Trump reflation trade
- Downside to gain momentum below 100-DMA
- UK prelim GDP in focus
The GBP/USD pair extended its overnight bearish consolidative mode into Asia this Wednesday, as the bears gathered pace for a decisive break below 100-DMA support located at 1.3113, with 1.3080 next target in sight ahead of the UK Q3 GDP release.
GBP/USD: UK prelim GDP to rescue the GBP bulls?
The spot remains better offered so far this session, with a broadly firmer US dollar and rising US Treasury yields keeping further downside in play, as attention shifts towards the UK growth numbers due later in Europe.
The greenback gained across its main competitors in tandem with Treasury yields after the GOP backed Taylor as the next Fed Chair in a show of hands, while optimism over Trump’s tax reform plans also boosted the US rates across the horizon.
The 10-year T-yields surpassed the key 2.40% to hit the highest levels since March this year, while the 2-year yields traded at nine-year tops near 1.60% on a Dec rate hike almost fully priced-in by the markets. Meanwhile, the USD index hovered near three-week tops of 93.89 reached earlier today.
Moreover, looming concerns over the Brexit negotiations also continue to add weight on the pound, especially after “PM May told UK law makers yesterday that the UK will go it alone on trade following Brexit if no deal was reached before next summer. The UK’s bargaining position does not appear to be especially strong but the GBP is suffering from Brexit fatigue and failed to react,” Analysts at Scotiabank noted.
The pair now awaits the UK GDP data for fresh impetus on the pound, with Q3 GDP growth rate expected to rise 03% Q/Q.
GBP/USD Technical View
Valeria Bednarik, Chief Analyst at FXStreet, writes: “..in the 4 hours chart, the price settled below its moving averages and below the 61.8% retracement of the latest bullish run, at 1.3145, now the immediate resistance, while technical indicators hold within bearish territory. The pair bottomed last week at 1.3087, with a break below it favoring a test of 1.3026, October monthly low. Support levels: 1.3090 1.3060 1.3025 Resistance levels: 1.3145 1.3180 1.3220.”