The GBPUSD pair traded on positive note on first trading day of the week and closed for the day with 0.31% increase in value. But the pair has been on steady downtrend movement across Asian session today as profit booking activites resulted in pair erasing some part of gains made yesterday. The pair opened for the day in red and is trading at 1.2870 down 0.13% on the day as of writing this article. While profit booking could be viewed as one of factors that provide bearish influence to pair, the dollar is bid across the board as we get into European trading as news hit market that the US President Donald Trump and Germany’s Chancellor Anegla Merkel agreed on more talks on the US-EU trade barriers which also boosted the risk-on trade in the Asian markets.
USD Makes a Comeback on Profit Booking & News of US-EU Trade Talks
Meanwhile, the US dollar index staged a comeback from three-week lows of 94.68 and managed to regain the key 94.80 level, putting pressures on most majors.Broad-based US dollar price-action remains the exclusive driver for Cable so far this week, in absence of fresh catalysts while markets ignore a better sentiment towards risk assets, as reflected by higher Asian equities. The spot is seen extending its corrective slide further below the 1.29 handle on looming concerns over a hard-Brexit landing, as the UK government prepares for a no-Brexit deal, further adding to the weight on the GBP, keeping the upside attempts short-lived. Looking ahead, the pair eagerly awaits the US CB consumer confidence, good trade balance and the UK BRC Shop Price Index for August for fresh trading impetus.
When looking at the pair the pair from technical perspective, the pair is neutral-to-bullish according to readings in the 4 hours chart, as it managed to advance above a still flat 20 SMA, while technical indicators entered positive territory, but the RSI already lost upward strength. A key resistance comes around 1.2935, the 38.2% retracement of the July/August decline, and where the pair met sellers last week. A continued advance above it exposes 1.3010, the 50% retracement of the mentioned slide. Expected support and resistance for the pair are at 1.2845, 1.2800, 1.2770 and 1.2935, 1.2960, 1.2990 respectively.