- The dollar ends a weekly positive streak across the board, although risk aversion prevails.
- The pound shows signs of life and rebounds more than 200 pips.
- GBP/USD could correct further considering the magnitude of the recent drop.
The GBP/USD moves sideways on Friday, consolidating slightly below 1.2500. The pair held steady even as stocks on Wall Street turned negative. Risk aversion offers no boost to the dollar.
The pound rose against the dollar for the first time in five weeks, while recovering from the lowest level in almost two years and after a drop of 900 pips. The main trend remains down for GBP/USD. The pair moved away from the lows of the year showing signs of a temporary bottom. The recovery seems to have room for manoeuvre, especially if financial tensions in world markets ease.
technical perspective
The GBP/USD pair tested the resistance at 1.2540, where the 23.6% Fibonacci retracement of the downtrend started in late March is located, before entering a consolidation phase on Friday, said Dwani Mehta, an analyst at FXStreet. “On a bullish note, the pair managed to close above the 21 DMA for the first time since March 22 and the RSI on the daily chart rose to 50.”
According to Mehta, should 1.2450 hold as short-term support, GBP/USD could test 1.2540 and target 1.2630 as the next upside target. “A daily close above the latter could attract buyers and open the door for further gains towards 1.2750 (Fibonacci retracement 38.2%)”.
Technical levels
Source: Fx Street
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