GBP/USD ignores risk aversion and hits 2-week highs above 1.2500

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  • US dollar extends decline, DXY falls 1% to its lowest in two weeks.
  • Wall Street rebound fades, Dow Jones falls 1.10%.
  • GBP/USD rebounds sharply and breaks above the 20-day SMA again.

The GBP/USD rises on Thursday, fully recovering from Wednesday’s decline, even as the stock market remains down and under pressure. The pair rose more than 150 pips from the daily low and recently reached 1.2512, the highest level since May 5th.

Weakening USD drives GBP higher

Broad dollar weakness boosted GBP/USD. DXY is down 1.05%, trading at two-week lows below 102.80, although risk aversion remains. The FTSE 100 fell 2.12% and on Wall Street, the Dow Jones fell 1.00%. The Nasdaq managed to rise to positive territory and gain 0.35%.

The demand for quality assets boosted public debt. The 10-year Treasury bond yield stands at 2.81%, a far cry from the 3% it hit on Wednesday. UK yields remained in the recent range (10-year yield around 1.85%). Falling yields weakened the dollar, which was the worst performer in the G10 space on Thursday.

US economic data showed initial jobless claims were the highest since January at 218,000, while continuing claims hit the lowest level since 1,970. Philadelphia Fed fell to 2.6 in May (vs. market consensus of 16). Existing home sales fell 2.4% in April. The UK retail sales report for April will be released on Friday.

GBP/USD breaks back above the 20 SMA

The rise in GBP/USD pushed the price back above the 20-day simple moving average. The pound is having a hard time holding above 1.2500. A clear daily close above would add support for an extension of the move higher.

A new failure here would expose the 1.2330 low again. Before that level, the 1.2400 zone offers interim support.

Technical levels

GBP/USD

Panorama
Last Price Today 1.2419
Today’s Daily Change 0.0080
Today’s Daily Change % 0.65
Today’s Daily Opening 1.2339
Trends
20 Daily SMA 1.2481
50 Daily SMA 1.2851
100 Daily SMA 1.3177
200 Daily SMA 1.3375
levels
Previous Daily High 1.2501
Previous Daily Minimum 1,233
Previous Maximum Weekly 1.2406
Previous Weekly Minimum 1.2155
Monthly Prior Maximum 1.3167
Previous Monthly Minimum 1.2411
Daily Fibonacci 38.2% 1.2395
Daily Fibonacci 61.8% 1.2436
Daily Pivot Point S1 1.2279
Daily Pivot Point S2 1.2219
Daily Pivot Point S3 1.2108
Daily Pivot Point R1 1,245
Daily Pivot Point R2 1.2561
Daily Pivot Point R3 1.2621

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Source: Fx Street

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