GBP/USD Shows Signs of Selling Pressure After Failure Above Major ResistanceGBP/USD briefly traded at a fresh three-week high yesterday before turning lower to post a small daily loss which ended a four-day bullish streak.
GBP/USD sellers stepped in to hold the pair below 1.2650 yesterday, an area that was also a major hurdle for the exchange rate back in April.
Sterling has otherwise shown strength this week and remains on track to post the best weekly performance among the major currencies. The GBP/USD pair is likely to see buyers on dips for this reason although it will need to overcome 1.2650 resistance to regain it’s earlier upward momentum.
The economic calendar has been light this week and most of the major currency pairs have been taking queues from the equity markets and risk sentiment. Stock indices turned lower yesterday but have mostly traded sideways during the week.
Investors are discouraged by the rising Coronavirus cases in the US with new cases rising above 60,000 on Thursday. This is the largest single-day rise that any country has seen thus far.
The weekly unemployment claims report from the US was better than expected but still showed a notable 1.3 million new claims filed. Later in the day, the US will report its latest producer price index figures.
The 1.2650 area was a major hurdle for the pair in April, triggering a notable decline on both attempts at the level that month.
At that time, the 200-day moving average fell near the horizontal level to create a confluence. The same moving average is currently found at 1.2688 and sellers stepped in yesterday slightly ahead of the indicator.
The early day rise followed by a sell off has resulted in the formation of a doji candle on a daily chart. This will be perceived as a sign of reversal potential to technical traders and rallies in the session ahead may be sold off as a result.
Upside resistance for the pair for the session ahead remains at 1.2650 while a potential downside target, if the pair corrects from here, is seen at 1.2530.
- GBP/USD posted a loss yesterday to end a 4-day bullish streak. A candlestick formation on a daily chart signals the potential for a correction.
- Major resistance is in play at 1.2650, This area could remain a hurdle over the near-term.
For a look at all of today’s economic events, check out our economic calendar.