- GBP/USD finds some support near 100-day SMA amid a subdued USD price action.
- The pair had a rather muted reaction to a rather unimpressive UK macro releases.
- The upside is likely to remain limited, warranting some caution for bullish trades.
The GBP/USD pair struggled to capitalize on the intraday bounce from over one-week lows and held steady near the 1.2600 mark post-UK macro releases.
The pair stalled this week’s corrective slide from three-month tops – levels beyond the 1.2800 mark – and found some support just ahead of the 100-day SMA, near the 1.2545 region. The US dollar struggled to capitalize on the previous day’s strong positive move amid some stability in the global financial markets and turned out to be one of the key factors that extended some support to the GBP/USD pair on the last trading day of the week.
The pair, however, lacked any strong follow-through and had a rather muted reaction to the latest UK macro data, which showed that the economy contracted by 20.4% in April. The reading was worse than the 18.4% fall anticipated, and a 5.8% decline recorded in the previous month. Adding to this, the UK manufacturing and industrial production figures also missed market expectations, largely offsetting better-than-expected UK trade balance data for April.
This comes amid the increasing risk of a no-deal Brexit and did little to impress the GBP bulls. Nevertheless, a subdued USD price action continued lending some support to the major, albeit the upside is likely to remain limited amid shaky market sentiment. Fading hopes for a sharp V-shaped recovery from the coronavirus pandemic and fears of a second wave of coronavirus outbreak might keep a lid on any optimism. This, in turn, should cap the upside for the GBP/USD pair.
Technical levels to watch