GBP/USD takes a U-turn, drops below 1.3550 ahead of NFP
- DXY break higher in Europe.
- Unperturbed by risk-on.
- US payrolls in focus.
The GBP/USD pair came under renewed selling pressure and reversed its entire Asian rise, now looking to test the NY lows near 1.3535 region.
GBP/USD back to test 5-DMA at 1.3540
The spot staged a solid reversal from two-day tops of 1.3577 and eroded nearly 30-pips post-European open, after the USD bulls stormed their way higher, driving the USD index +0.15% higher to hit daily tops at 91.76 levels.
Additionally, a lack of fresh fundamental drivers from the UK docket also collaborated to the downside in the major, as markets preferred to lock-in upbeat UK services PMI inspired gains ahead of the highly influential US NFP data release.
Meanwhile, the risk currency pound also failed to benefit from the risk-on rally seen in the European equities, as the sentiment remains purely driven by the USD dynamics.
All eyes now remain on the US labor market report for the next direction in the pair. US NFP: Expect a deceleration in the pace of job gains in Dec – Goldman Sachs
GBP/USD Technical Levels
FXStreet’s Analyst, Haresh Menghani, writes: “From current levels, the 1.3600 handle, marking 61.8% Fibonacci expansion level of 1.3062-1.3550 up-move, and subsequent retracement, might continue to act as immediate strong resistance, which if conquered sets the stage for an extension of the pair's near-term bullish momentum back towards 2017 yearly tops resistance near the 1.3655-60 region.”
“On the flip side, bulls might continue to defend a short-term descending trend-line resistance break area, now turned support, near the 1.3500-1.3490 region, below which the pair is likely to accelerate the corrective slide back towards 1.3435-30 zone en-route the 1.3400 handle and 1.3385 horizontal support,” Haresh adds.