GBP/USD picks up fresh bids and clings to modest daily gains above 1.2750. Markets cheer improving risk sentiment as traders shrug off geopolitical risks and reposition ahead of the US inflation test, making it difficult for the US Dollar to gather strength.
GBP/USD holds above the ascending trend line and the Relative Strength Index (RSI) indicator on the 4-hour chart stays near 60, highlighting the bullish bias in the near term. On the upside, the 200-period Simple Moving Average (SMA) aligns as first resistance at 1.2780 ahead of 1.2810-1.2820 (Fibonacci 61.8% retracement of the latest downtrend, 200-day SMA) and 1.2870 (50-day SMA).
Looking south, immediate support could be spotted at 1.2750 (Fibonacci 50% retracement) before 1.2700 (Fibonacci 38.2% retracement) could be seen as next support before 1.2650 (100-period SMA).
After spiking to its highest level since November 12 above 1.2800 on Friday, GBP/USD reversed its direction in the American session and closed in the red, snapping a three-day winning streak. In the European morning on Monday, the pair holds its ground and looks to test 1.2780 resistance.
The data published by the US Bureau of Labor Statistics (BLS) showed on Friday that Nonfarm Payrolls (NFP) in the US rose by 227,000 in November, beating the market expectation for an increase of 200,000. The Unemployment Rate edged higher to 4.2% from 4.1% in the same period, while the annual wage inflation, as measured by the change in the Average Hourly Earnings, remained unchanged at 4%, coming in above analysts' forecast of 3.9%. After suffering large losses against its major rivals on Thursday, the US Dollar (USD) benefited from the upbeat jobs report late Friday, causing GBP/USD to stretch lower.
The US economic calendar will not offer any high-tier data releases until the BLS publishes the Consumer Price Index (CPI) figures for November on Wednesday.
In the European morning on Monday, the UK's FTSE 100 is up nearly 0.4% and US stock index futures trade marginally higher on the day. In case risk flows dominate the action in financial markets following a bullish opening in Wall Street, the USD could come under renewed selling pressure and help GBP/USD push higher.
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