Market Overview

GBP/USD Forecast: Poised To Extend Recovery Towards 1.3240 Hurdle


The post-NFP US Dollar retracement, accompanied with optimism over the UK PM Theresa May’s commitment to her leadership role helped the GBP/USD pair to stage a solid recovery on Monday. The up-move got a boost from the UK Office of National Statistics' upward revision of second-quarter unit labor costs, which seems to have convinced market participants that BOE might have to tighten policy at a faster pace than previously thought.

The pair built on overnight strong gains and spiked to the 1.3200 neighborhood during early European session on Tuesday following the release of better-than-expected UK manufacturing/industrial production data. The positive data, to some extent, got negated by larger UK trade deficit for August and failed to assist the pair to decisively break through the 1.3200 handle.

Currently placed marginally above its immediate resistance marked by 23.6% Fibonacci retracement level of its recent corrective slide, the pair seems more likely to extend the recovery move towards 1.3230-40 resistance ahead of 38.2% Fibonacci retracement level hurdle near the 1.3265-70 region. A follow through buying interest has the potential to lift the pair even beyond the 1.3300 handle towards its next major hurdle near the 1.3340-45 region, also coinciding with 50% Fibonacci retracement level.

Conversely, any pull-back from higher levels now seems to find fresh buying interest around 100-day SMA support, near the 1.3135-30 region. A convincing break below the mentioned support could drag the pair back below the 1.3100 handle towards retesting 1.3075 level before eventually dropping to its next key support near the 1.30 psychological mark.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Forex FXStreet FXstreet.comForex Markets


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