GBPUSD Maintains Uptrend; Shrugs Off News of Iran Attack on US Military Bases
GBPUSD has been little changed despite news that Iran has bombed two US military bases. The currency pair has trading within a 45-pip range since the latter part of yesterday’s New York session. In fact, the currency pair is even trading a few pips above today’s open price at 1.3224.
Iran Attacks Two US Bases in Iraq
Last night, Iran acted on its promise to avenge the death of Iranian General Soleimani after a US air strike killed him last week. Over a dozen missiles were said to have been launched to US military bases in Iraq in Ayn al-Assad and Erbil.
Market participants have been bracing for further escalation between the two countries after the death of Iran’s key military general. Without any confirmed casulaties, however, it would seem that the market’s reaction will remain muted. The US Pentagon has announced that there were no US casualties in its initial assessment. In fact, US President Donald Trump even tweeted “All is well” after the attack.
The casualty-count is important because it will determine the extent of the US’ retaliation. Iran has already said that it will stop attacking US military bases if Trump does not respond to today’s missile launch.
ADP Report Due Today
Aside from market sentiment dictating price action on GBPUSD today, we also have the ADP report on deck. Data for December, due to be released at 1:15 pm GMT, is estimated to print 160,000 jobs. Yesterday, the better-than-expected ISM non-manufacturing PMI report drove GBPUSD lower when it came in at 55.0 versus the 54.5 forecast. We could see the same with a higher-than-anticipated ADP report. On the other hand, GBPUSD could trade higher if data disappoints.
On the hourly time frame, we can see that the uptrend on GBPUSD is still intact. In fact, you can see that the currency pair even bounced off support at the rising trend line (from connecting the lows of December 23, December 24, January 3, January 6, and January 7). It is currently limited by resistance at the 100 SMA and support at the 100 SMA. Now, a bullish candlestick closing above resistance at the 100 SMA could hint that there is more upside potential. We could then see GBPUSD soon trade higher to yesterday’s highs at 1.3211.
On the other hand, a bearish candlestick closing below the 200 SMA will mean that the trend line support will already have been invalidated. You can then look at GBPUSD’s January 3 lows at 1.3060 for support.