GBP/USD corrects further from 2-1/2 month tops, 1.30 mark back on sight
Our preference: short positions below 1.3075 with targets at 1.3015 & 1.2975 in extension.Alternative scenario: above 1.3075 look for further upside with 1.3095 & 1.3120 as targets..
• A goodish pickup in the USD demand prompts traders to take some profits off the table.
• Expectations of Article 50/receding fears of no-deal Brexit might limit further downside.
The GBP/USD pair extended its steady intraday decline from 2-1/2 month tops and is
currently placed at the lower end of its daily trading range, around the 1.3030-25 region.
The pair struggled to extend this week’s strong bullish momentum further
beyond the very important 200-day SMA and started retreating from the 1.3100 neighborhood,
the highest since Nov. 8. The pair snapped three consecutive days of a winning streak and in absence of any fresh catalyst,
the corrective slide could be solely attributed to some profit-taking amid a goodish pickup in the US Dollar demand.
Despite a weaker tone around the US Treasury bond yields, concerns over global growth,
the US government shutdown and unresolved US-China trade disputes,
the greenback regained positive traction and was seen as one of the key factors prompting traders to take some profits off the table,
especially after the latest upsurge of nearly 270-pips over the past three trading sessions.
The downtick might still be looked upon as a buying opportunity amid growing market expectations of an
extension of Article 50 and receding risk of a no-deal Brexit, reinforced by Wednesday’s report that the
UK Labour Party will back an amendment aimed at forcing a parliamentary vote on delaying Brexit if a deal isn’t passed by Feb. 26.
An extension of Article 50 is also seen as increasing chances of a second referendum, which might continue to lend some support to the British Pound and help limit deeper losses, at least for the time being and amid absent relevant market moving economic releases.
Technical levels to watch
Immediate support is now pegged near the key 1.3000 psychological mark handle and is closely followed by the 1.2975-65 region, below which the downfall could further get extended back towards the 1.2900 handle. n the flip side, the 1.3065 level now seems to act as an immediate hurdle,
which if cleared might assist the pair to make a fresh attempt towards conquering the 1.3100 round figure mark.