GBP/USD finds buyers near 1.3525 as USD rebound stalls
- DXY consolidates below 92 handle.
- Back to test 1.3550?
- Eyes on Fed Bostic’s speech.
Fresh bids emerged near 1.3525 region over the last hour, allowing a tepid recovery in GBP/USD back towards the midpoint of the 1.35 handle.
GBP/USD: Buy the dips?
The GBP/USD pair fell into the red zone on the first trading day of this week, halting the 3-day rise amid extension of the post-NFP recovery in the US dollar against its main competitors. The USD index bounced sharply to hit fresh five-day tops of 92.30 before easing slightly to trade near 91.90 region, as the time of writing.
The USD bulls take a breather, as Treasury yields fail to benefit from persisting risk-on market profile, with concerns over the Fed rate hike expectations back on investors’ minds ahead of the FOMC member Bostic’s speech.
Meanwhile, the impact of the weekend’s headlines, citing that the UK PM will appoint a ‘No deal’ Brexit Cabinet Minister to provide regular updates on preparations for leaving the EU without a trade deal, is likely to be limited on the pound. Viraj Patel, a Research Analyst at ING, explains, “ while in the political sphere, reshuffles hold the equivalent entertainment value of ‘eviction days’ in a popular reality TV show – any fundamental fallout for the pound seems unlikely from the PM’s team tinkering this week.”
“Any GBP/USD pullback towards 1.3400/50 should be seen as a buying opportunity given our 1.40 1Q18 target,” Viraj adds.
GBP/USD Technical Levels
FXStreet’s European Chief Analyst, Mario Blascak, PhD, writes: “The technical oscillators are at lower levels with the Relative Strength Index approaching oversold territory and the Slow Stochastics being heavily in Oversold condition. Should the lower boundary of the upwardly rising channel trend line at $1.3535 hold, the GBP/USD is likely to rebound up towards $1.3570-$1.3600. Given the trend exhaustion, the limit on the downside is likely to be at $1.3510 representing 38.2% Fibonacci retracement of the upmove from $1.3350 to $1.3615.”