GBP/USD: Extra downside faces support around 1.2720 – UOB

Pablo Piovano FXStreet

Further selling pressure in GBP/USD is expected to meet a tough support around 1.2720, according to Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.

Key Quotes

24-hour view: After GBP dropped to 1.2767 last Friday and rebounded, we highlighted yesterday that “despite the strong rebound, there is no clear increase in momentum, and GBP is unlikely to rise further.” We expected GBP to trade sideways between 1.2810 and 1.2910. In line with our view, GBP traded sideways, albeit in a much narrower range than expected (1.2829/1.2872). Momentum indicators are mostly flat, and further sideways trading appears likely. Expected range for today; 1.2795/1.2865.

Next 1-3 weeks: Our update from last Friday (28 Jul, spot at 1.2800) still stands. As highlighted, “downward momentum is building again, it remains to be seen if GBP can break the major support at 1.2720.” All in all, we expect GBP to trade with a downward bias as long as it stays below 1.2900 (‘strong resistance’ level previously at 1.2930).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.