GBP/USD clings to solid weekly gains, approaches 1.2800

  • Pound outperforms on Friday, amid UK data and weak USD.
  • GBP/USD up more than 200 pips for the week, holds above key resistance.

The GBP/USD pair reached a fresh six-week high during Friday’s American session at 1.2794 and then pulled back modestly. The pound is outperforming on the back of better-than-expected UK retail sales data. Market participants ignored US data (New Home Sales and Markit PMI). 

Despite UK data, the other driver in the GBP/USD continues to be a weaker US dollar. The greenback has been unable to recover and keeps looking for support, weakened by lower US yields. The DXY is about to post the fifth weekly decline in a row with the worst performance since March. It dropped below 94.50 to the lowest since September 2018.

Cable is holding firm to weekly gains and above the 1.2700 area, that capped the upside several times since March. From the level it had a week ago, it is up by 225 pips.

Technical outlook

The GBP/USD pair has broken above the 200-day Simple Moving Average and the downtrend resistance line that had capped it since early June, notes Yohay Elam, analyst at FXStreet.  “The bullish bias is compounded by upside momentum. So far, it is still not overbought, as the Relative Strength Index is still below 70.”

According to Elam, resistance is at 1.2770, followed by 1.2815, June’s peak while support waits at 1.27 (200-day SMA) and 1.2665, a swing high from early July.

Technical levels

 

 

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