GBP/USD Unable To Recover, Remains Vulnerable Looking At Key Support Area Near 1.3670

GBP/USD Current Price: 1.3754

• Dollar’s strength extends into another session, eyes turn to the NFP.
• BoE Governor Bailey offsets Haldane's comments, hitting the pound sterling.
• GBP/USD unable to recover, remains vulnerable looking at key support area near 1.3670.

After outperforming on Wednesday, the pound dropped across the board on Thursday. The combination of a weak pound and a rally of the US dollar, pushed GBP/USD to fresh monthly lows near the 1.3750 area. The dollar continues to shine even as US yields hold steady and despite risk appetite. Friday’s US employment report would be a key test for the current move of the dollar.

On Wednesday, the pound rose following comments from Bank of England’s Haldane and on Thursday gave them up and dropped at a fastest pace after BoE Governor Bailey offered a cautious outlook. He reiterated the central bank should not overreact to a temporary spike in inflation and mentioned activity would likely fade in the coming months. The dovish Bailey appears to be more popular at the Monetary Policy Committee than the hawkish Haldane, who is leaving his position. Regarding data, the final UK PMI was revised lower to 63.9 from 64.2.

GBP/USD short-term technical outlook

The 4-hour chart shows GBP/USD moving in a bearish channel, at the lower limit that could favor a rebound or suggest acceleration toward the next support seen at 1.3730. The RSI remains near but above 30. A break of a short-term downtrend line at 1.3830 should change the current stance to neutral, favoring a consolidation or a modest recovery of the pound. The 20-week moving average is starting to turn south, suggesting that the current bearish bias could prevail over the medium term.

Support levels: 1.3730 1.3700 1.3675

Resistance levels: 1.3785 1.3820 1.3855

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