GBP/USD Daily Price Forecast – GBP/USD Tests Psychological Support at 1.30 Handle despite Available Lifelines

The British pound broke down during the day on Thursday, slicing through the vital 1.30 level. This price level has served as a major support preventing serious decline in price value and now that the pair has started testing this price handle and moved below 1.30550 is a clear negative sign. Even with Dollar taking a defensive stance post U.S President Donald Trump’s comment, the pair has failed to climb back above 1.3050 handle. Brexit woes continue to weigh down the pair and if the price moves below 1.3000 handle we can expect steady decline in pair to continue for more than 100 pips easily. GBP/USD has been given a lifeline having just popped back through 1.30 the figure and on to 1.3049, breaking through the hourly 21-SMA at 1.3032 following Trump’s comments in a CNBC interview where he said that he does not approve with the rate rises, even though he said he “put a very good man in” at the Fed in Powell.

GBPUSD Continues Under Pressure

Markets are tumbling on Trump’s comments, with stocks, the dollar and Treasury yields all falling. The DXY is at 95.21 from 95.47 having been climbing in a range of 94.9880-95.6520. US 10 year yields are now down at 2.84% -0.03% within the day’s range of 2.83-2.90% as traders digest the headlines, figuring that a pause in interest rates hikes would be a positive, not that Trump has the authority to order the Fed or sway the FOMC from voting against hiking rates. While Trump has agreed that he won’t interfere with Central bank policies he has on multiple occasions expressed concerns over the direction in which US Fed is heading. Markets will soon come to their sense and remember that the Fed’s Chair and the FOMC are insulated from partisan politics. So this could well be a gift from Trump to cable bears – 1.3080 would otherwise call that trade off.

The Sterling is currently down over 2% from the week’s highs near 1.3290, and bulls are in full retreat after failing to recapture the pivotal 1.3300 technical level, with short-selling piling onto the weakened currency pair as a triplet of key economic data for the UK failed to impress against median market expectations. Tuesday’s Average Earnings failed to drive Sterling confidently into new buying positions after coming in exactly as expected, and the week spiraled out from there, with Wednesday’s CPI reading coming in softer than expected, followed by Thursday’s Retail Sales figures, which showed a -0.5% contraction against the previous month. Pound traders now head into Friday with a milder economic calendar line-up, with June’s Public Sector Net Borrowing dropping at 08:30 GMT, expected to tick higher from £3.356 billion to £3.6 billion. The technical readings in the 4 hours chart show that the ongoing correction doesn’t affect the dominant bearish trend. The 20 SMA heads south almost vertically some 80 pips above the current level and technical indicators have bounced from oversold readings but remain well into the red. Expected support and resistance for the pair are at 1.3000 /1.2970 /1.2935 and 1.3080 /1.3120 /1.3155 respectively.