GBPUSD Stuck In Range, But A Downside Break Looks More Likely
GBPUSD registered a monthly low price of 1.2518 before making small gains to trade at 1.2616 at 09:20 GMT during the London session on Friday. Nonetheless, the pair was still -0.15% below the day’s opening and looks to be on course to close the fourth consecutive week on the losing end.
The pound has cracked under sustained pressure from the dollar in the last month, underpinned by a hawkish Federal Reserve and a series of strong US economic data. The latest of these was Thursday’s US initial jobless claims data, which beat expectations by 3,000. Also, investors opted to favour the dollar despite Wednesday’s positive UK housing market data by mortgage provider Helifax , which showed that house prices rose by 1.3% between December and January.
The US dollar will likely continue riding on strong US Treasury yields, on Friday. Yields on the 10-year Treasurys stood at 4.17%, up 15 basis points in the last month at the time of writing. However, we are likely to witness sideways action by the GBPUSD pair on in the absence of substantive US and UK economic data on Friday. Nonetheless, developments in the Middle East geopolitical scene could introduce a new angle to the current setup.
Israel and Hamas have reportedly hit a deadlock in their Qatar-mediated ceasefire talks. Furthermore, Israeli PM Benjamin Netanyahu is seemingly intent on a ground offensive in the Gaza city of Rafah. Israel continued with its airstrikes against the city on Thursday, but a ground assault will almost certainly fan the flames of the war. A spike in the geopolitical unrest in the region over the weekend could tilt the scales in favour of safe haven US dollar as the market awaits Tuesday’s US CPI printout.
The RSI on the 30-minute chart shows mixed signals with a bearish bias. GBPUSD will likely pivot at 1.2595, from which the bears will try pushing it towards the first support at 1.2570. Further downside action could see the pair find support at 1.2550. Moves above 1.2595 will signal bullish control, with the first target being at 1.2635. A break beyond this level will invalidate the bearish view, with the bulls potentially pushing the pair further up to test 1.2655.