GBP/USD - Eyes bull hammer reversal, focus on PM May speech

Cable created a bullish hammer yesterday.
Positive follow-through today would confirm bull reversal.
Limited upside scope due to Brexit uncertainty, trade wars and risk aversion.
PM May to ‘disappoint’ with lack of detail in key Brexit speech.

Omkar Godbole FXStreet Contributor

The GBP/USD pair created a bullish hammer candle on the daily chart, but only at NY close above the ascending 50-day moving average (MA) of 1.3830 would confirm a bullish reversal.

However, the big gains are ruled out as the UK is a current account deficit country and hence the Pound is extremely vulnerable to rising odds of an all out global trade war and the resulting risk aversion in the equities.

Further, CNBC report says the analysts believe PM May (during her speech later today) will fail to provide enough detail to please the EU, potentially setting negotiations on a collision course. The longer the UK government remains in brexit deadlock, the tougher it becomes for the Bank of England (BOE) to tighten the policy. Thus, GBP bulls face an uphill task.

As of writing, the spot is mildly bid around 1.3786 and could remain flat lined ahead of PM May's speech. BOE's Governor Carney is also scheduled to speak, but will focus on the evolution of money and the emergence of cryptocurrencies and hence is less relevant for Pound.

GBP/USD Technical Levels

The pair suffered a downside break of the symmetrical triangle earlier this week. The ascending trendline (drawn from the Nov. 13 low and Dec. 26 low) support has been breached as well.

FXStreet Chief Analyst Valeria Bednarik writes, "technically, the pair has barely corrected extreme conditions, but remains biased lower, at risk of breaking lower, as in the 4 hours chart, the 20 SMA maintains its strong bearish slope above the current level, while technical indicators remain at overbought levels, barely up from their daily lows."

Support levels: 1.3765 1.3730 1.3700

Resistance levels: 1.3915 1.3950 1.3990

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M		Neutral	Shrinking
1H	Bullish	Neutral	Expanding
4H	Bullish	Neutral	Shrinking
1D	Strongly Bearish	Neutral	Low
1W		Neutral	High
Updated Mar 2, 04:45 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD onsolidates around mid-1.1800s as traders keenly await FOMC Minutes

The EUR/USD pair struggles to capitalize on the previous day's goodish rebound from the 1.1800 neighborhood, or a one-and-a-half-week low, and consolidates in a narrow band during the Asian session on Wednesday. Spot prices currently trade just below mid-1.1800s, nearly unchanged for the day.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold bounces back toward $4,900, looks to FOMC Minutes

Gold is attempting a bounce from the $4,850 level, having touched a one-week low on Tuesday. Signs of progress in US–Iran talks dented demand for the traditional safe-haven bullion, weighing on Gold in early trades. However, rising bets for more Fed rate cuts keep the US Dollar bulls on the defensive and act as a tailwind for the non-yielding yellow metal. Traders now seem reluctant ahead of the FOMC Minutes, which would offer cues about the Fed's rate-cut path and provide some meaningful impetus.

DeFi could lift crypto market from current bear phase: Bitwise

Bitwise Chief Investment Officer Matt Hougan hinted that the decentralized finance sector could lead the crypto market out of the current bear phase, citing Aave Labs’ latest community proposal as a potential signal of good things to come.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.