GBP/USD rebounds stiffly into 1.2550, upside limited as sentiment remains half-cocked
- Cable bolstered by post-drop market fade, but remains in bearish territory after Wednesday's declines.
- With another US NFP in the barrel, action can be expected to remain constrained as long as market sentiment holds.
GBP/USD is trading into 1.2550 after an early Thursday plunge into 1.2396, and fx markets continue to recover from a risk-off shock fueled by thin volumes and concerned investors who pile into safe havens at every sign of a steepening global growth slowdown.
Apple Inc slashed their earnings expectations late Wednesday, blaming the reduced forecasts on China's worse-than-expected economic downturn, sending broader action into safe havens as traders pulled the plug, but with markets still volume-light in the post-Christmas and New Year's action, the downside volatility gave way to a steady fade move that is running out of steam heading into the London market session.
Construction PMIs for the UK will be dropping at 09:30 GMT today, expected to slow further from 53.4 to 52.9, with US ISM Manufacturing (forecast 58.0, last 60.7) and Prices Paid data (forecast 57.9, last 59,3) for December slated for 15:00 GMT, but many traders will either be sitting on the sidelines or buckling down ahead of Friday's US NFP data drop, which promises plenty of volatility to cap off an already twitchy trading week.
GBP/USD Levels to watch
Despite Thursday's steady fade action through the Asian market session, the Cable retains a bearish lean, according to FXStreet's own Valeria Bednarik:
Technically, the pair is at its lowest in over two weeks, bearish short-term, given that, in the 4 hours chart, it's back below its moving averages, with the 200 EMA turning lower at 1.2730 and the 20 SMA doing the same near 1.2680. The Momentum indicator in the mentioned chart heads lower in negative territory and at its lowest in over three weeks, while the RSI is trying to stabilize around 36, all of which keeps the risk leaned to the downside. The pair has given back the ground added in the previous two weeks, reflecting how concerned investors are on Brexit and how willing are to resume selling Pound at the slightest sign against it.
Support levels: 1.2580 1.2540 1.2510
Resistance levels: 1.2610 1.2650 1.2685