GBP/USD outlook: Limited negative impact from BoE rate cut

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable traded in a choppy mode with limited downside after BOE rate cut and regained traction on much higher than expected US jobless claims.

The pair returned above 1.2800 mark after hitting the lowest in almost one month (1.2750), with subsequent bounce signaling formation of a bear-trap on daily chart (below Fibo support at 1.2779, reinforced by 55DMA).

This may generate initial signal of formation of reversal pattern, although with more work at the upside needed to validate signal (close above 20DMA at 1.2888 seen as minimum requirement).

Until then, the downside will remain vulnerable, as negative momentum continues to strengthen on daily chart).
Look for firmer direction signals on break of either pivot (1.2779 or 1.2888).

US Manufacturing PMI data (today) and Labor report (Friday) expected to provide fresh signals.

Res: 1.2830; 1.2873; 1.2888; 1.2943.
Sup: 1.2779; 1.2750; 1.2706; 1.2683.

Interested in GBP/USD technicals? Check out the key levels

1. R3 1.2917
2. R2 1.2891
3. R1 1.2873
PP 1.2847
1. S1 1.283
2. S2 1.2804
3. S3 1.2787

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

EUR/USD holds firm above 1.1900 as US NFP looms

EUR/USD holds its upbeat momentum above 1.1900 in the European trading hours on Wednesday, helped by a broadly weaker US Dollar. Markets could turn cautious later in the day as the delayed US employment report for January will takes center stage.

GBP/USD remains above nine-day EMA near 1.3650

GBP/USD recovers its recent losses from the previous session, trading around 1.3680 during the European hours on Wednesday. The technical analysis of the daily chart indicates a sustained bullish bias, as the pair trades within an ascending channel pattern.

Gold sticks to gains near $5,050 as focus shifts to US NFP

Gold holds moderate gains near the $5,050 level in the European session on Wednesday, reversing a part of the previous day's modest losses amid dovish US Federal Reserve-inspired US Dollar weakness. This, in turn, is seen as a key factor acting as a tailwind for the non-yielding yellow metal ahead of the critical US NFP release.

US Nonfarm Payrolls expected to show modest job gains in January

The United States Bureau of Labor Statistics will release the delayed Nonfarm Payrolls data for January on Wednesday at 13:30 GMT. Investors expect NFP to rise by 70K following the 50K increase recorded in December.

S&P 500 at 7,000 is a valuation test, not a liquidity problem

The rebound from last week’s drawdown never quite shook the sense that it was being supported by borrowed conviction. The S&P 500 once again tested near the 7,000 level (6,986 as the high watermark) and failed, despite a macro backdrop that would normally be interpreted as supportive of risk.

Bitcoin price slips below $67,000 ahead of US Nonfarm Payrolls data

Bitcoin price extends losses, and trades below the lower consolidating boundary at $67,300 at the time of writing. A firm close below this level could trigger a deeper correction for BTC. Despite the weakness in price action, institutional demand shows signs of support, recording mild inflows in ETFs so far this week.