The GBP/USD currency pair fell off session highs of about 1.2300 to trade at about 1.2250 on Wednesday after the UK’s Democratic Unionist Party (DUP) rejected an EU offer for a time-limit on the Irish backstop.
The currency pair plunged yesterday to hit a new 5-week low of about 1.2195 but this morning momentarily surged towards 1.2300 after news broke indicating that the DUP was going to consent on EU’s Brexit offer.
GBP/USD Fundamentals Overview
From a fundamental perspective, the GBP/USD is trading at the back of a mixed week in terms of economic data from both markets. The UK Halifax House Prices for last month and the 3-month period ended last month missed expectations with -0.4% (MoM) and 1.1% (YoY) respectively. Analysts were expecting a 0.1% change for last month and 1.6% for the 3-month period.
On the other hand, the US Redbook Index for last week matched the performance fo the previous week (MoM) basis with -1.1% while the (YoY) figure edged lower to 5.5% compared to 5.8% in the final week of September.
TheUS IBD/TIPP Economic Optimism outperformed expectations of 51.2 with 52.6 despite a poor inflation data earlier on. The US PPI for September came in at -0.3% versus an expectation of 0.1% (MoM) while the (YoY) data missed the expectation of a change of 1.8% with 1.4%.
GBP/USD Technical Analysis (the 60-min Chart)
Technically, the GBP/USD currency pair appears to have recently made a bearish breakout off a descending channel, which indicates an increase in downward pressure. The attempted rebound on Tuesday was short-lived with the pair plunging back to the newly established consolidative territory below 1.2230.
Therefore, the bears will be targeting short-term profits at around 1.2197 or lower at 1.2150 while the bulls will hope for a major rebound towards 1.225 or higher to Tuesday’s high of about 1.2297.
GBP/USD Technical Analysis (the Daily Chart)
In the daily chart, the GBP/USD currency pair appears to be trading under considerable bearish pressure. The currency pair recently attempted to make a major recovery as demonstrated using the Fibonacci Retracements. It has since pulled back to the center of the descending wedge.
Therefore, the bulls will be targeting long-term profits at around 1.2279, 1.2343 or higher at 1.2437. On the other hand, the bears will hope that the current pullback continues towards 1.2194 or lower at 1.2108.
In summary, the GBP/USD currency pair appears to be experiencing strong bearish pressure in both the long-term and the short-term markets. However, the bulls will be targeting all the rebounds that come along.