GBP/USD off 4-week tops, near 1.3000 ahead of US PCE
- EU’s Barnier’s Brexit offer-led rally fades? Eases to the 1.3000 level.
- Risks further correction, as risk-off returns and puts a bid under the US dollar.
The US dollar bulls regained poise in the European session, knocking-off GBP/USD pair back near the 1.3000 resistance-turned-support, as risk-off seeped back amid tumbling European equities.
The renewed sell-off in the Emerging Markets (EM) currencies, led by the Turkish Lira, dampened the market sentiment and weighed down on the risk assets such as the equities, oil and the British pound.
Further, the risk-off sentiment has helped put a bid back under the US dollar, helping the buck stage a solid comeback against its major rivals. The US dollar index bounced-back to 94.70, reversing a dip to 94.47 lows.
However, Cable’s corrective move lower could find some support from the renewed Brexit optimism, in the wake of the latest upbeat remarks from the European Union (EU) Chief Brexit Negotiator Barnier. Barnier said on Wednesday that the EU is ‘prepared to offer a partnership with Britain such as has never been with any other country’.
The pair now looks forward to the US core PCE inflation and jobless claims for fresh near-term trading opportunities, as the UK net lending to individuals and mortgage approvals data left the GBP bulls largely unimpressed.
GBP/USD Technical Levels
Slobodan Drvenica at Windsor Brokers, notes: “Wednesday’s break and close above 1.30 barrier (also Fibo 61.8% of 1.3213/1.2661 bear-leg) was a bullish signal, with bulls eyeing barrier at 1.3057 (55SMA) and capable of traveling to 1.3142 (base of descending and thinning daily cloud) on strong bullish sentiment. Very strong bullish momentum supports the action, but slow stochastic enters the overbought territory, warning that corrective action could be anticipated in the near-term. Broken 1.30 barrier acts as immediate support, with extended dips expected to find footstep at 1.2940 zone (broken 30SMA/previous recovery high of 22 Aug).”