GBP/USD stages a solid comeback, but stays below 1.2880

The bears loosened their grip over the last hour, allowing the GBP/USD pair to bounce-off a sharp downward spike to 1.2850 levels. However, sellers continue to lurk near 1.2880 levels keeping any recovery attempt restricted.

GBP/USD still capped below 1.2900

The spot staged a solid recovery and went onto print fresh session tops at 1.2877 levels last hour, as the risk-off trades stabilized amid a minor-recovery seen in the European stocks and Treasury yields.

The bulls, however, find it difficult to take on the recovery closer towards 1.29 handle, as the Cable fails to benefit from the cross-driven strength, with the EUR/GBP cross meandering near daily lows of 1.9120, while GBP/JPY recovers considerably from 140.12 lows to now trade near 140.40 levels.

Further, renewed buying-wave seen behind the US dollar against its major rivals also limit the upside in the GBP/USD pair. The USD index rises back towards 93.50 barrier, up +0.11% on the day.

Next of relevance for the major remains the UK’s Q2 GDP and US durable goods data due later this week, while the Fed Chair Yellen’s speech at the Jackson Hole Symposium will also offer fresh direction on the prices.

GBP/USD levels to consider             

“Negative outlook is supported by bearish setup of daily studies, with bear-cross of 10/55SMA’s forming today and offering additional pressure. Sustained break below 1.2850 would open another key support at 1.2811 (12 July trough) and risk fresh bearish extension. Broken 100SMA (1.2872) marks initial resistance, ahead of daily cloud top (1.2908) and last week’s congestion, reinforced by 55SMA at 1.2928, which is expected to limit extended upticks. Res: 1.2872; 1.2908; 1.2928; 1.2970 Sup: 1.2850; 1.2811; 1.2749; 1.2700,” Slobodan Drvenica at Windsor Brokers Ltd explained.