GBPUSD Under Selling Pressure on Baghdad Missile Attack

GBPUSD steadily traded lower in yesterday’s trading. The currency pair opened at 1.3239 and peaked at 1.3264 during the Asian session. By the New York session close, the currency pair had settled at 1.3139.

Economic Reports from the UK and US

As I mentioned yesterday, it would seem that the UK’s Brexit concerns have begun to loom over the pound. It also did not help that there were very few surprises in yesterday’s roster of economic data released from the UK and the US. The UK’s final manufacturing PMI for December slightly missed the 47.6 forecast when it printed at 47.5. Meanwhile, unemployment claims from the US came in as expected at 222,000. The US final manufacturing PMI also fell short of expectations at 52.4 versus the 52.5 consensus.

Risk Aversion Dominates Today’s Asian Session

In today’s Asian session, the pound and the other non-safe haven currencies are facing some downward pressure. This was instigated by reports that the US launched missile attacks on Baghdad. The move consequently led to the death of an Iranian military leader. To add more worries to investors, North Korea’s official newspaper also cautioned of an “immediate and powerful” attack.

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GBPUSD Outlook

On the hourly time frame, we can see that the currency pair has been finding resistance at the falling trend line when you connect the highs of December 31 and January 2. The currency pair still looks like it has some room to trade higher with the falling trend line being around 1.3156. This price also coincides with the 38.2% Fib level when you draw from yesterday’s high to low. If there are enough buyers to push GBPUSD to close above the trend line, we could see the currency pair rally to its recent highs at 1.3265.

On the other hand, you should watch out for reversal candles around the trend line or a bearish close below the 100 SMA (where the currency pair is currently finding support). These could mean that sellers are looking to push GBPUSD support around 1.2943.

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