GBP/USD: Upside capped by 5-DMA

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 26, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Mumbai) - The GBP/USD pair remained under pressure in Asia, with almost non-existent appetite for risk currencies adding to sterling’s pain.

    GBP/USD supported at 1.4200

    The GBP/USD pair trades 0.14% lower at 1.4228, having posted day’s low at 1.4206 and day’s high at 1.4256. The major fails to surpass the 5-DMA resistance near 1.4242 and consolidates around 1.4230 over the last hours, having found strong support ahead of 1.42 handle.

    The cable remains weak in wake of a renewed selling interest seen in the oil prices, which bouts of risk-aversion and dampened the appeal of higher-yielding assets such as equities and the GBP.

    Moreover, markets remain cautious and refrain from placed big bets as the focus now remains on the BOE Governor Carney’s testimony on the Financial Stability Report before the Treasury Select Committee. The traders will look for cues/hints on the BOE’s policy stance, especially after Carney said ‘now is not the time to raise rates’ at its policy decision earlier this month.

    Looking ahead, the FOMC decision and the UK’s prelim GDP report remains the key risk events due to be reported tomorrow.

    GBP/USD Levels to consider

    The pair has an immediate resistance at 1.4266/67 (1h 200 & 50-SMA), above which 1.4295/ 1.4300 (daily R1/ round number) would be tested. On the flip side, support is seen at 1.4206 (Daily Low) below which it could extend losses to towards 1.4168 (daily S2).
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