GBP/USD trades a handful of pips below the 1.2900 mark, little affected by mostly encouraging US employment-related data. Market players remain cautious amid trade-war uncertainty. US Dollar corrects extreme oversold conditions, remains weak.
The Relative Strength Index (RSI) indicator on the daily chart holds near 80 and GBP/USD trades above the upper limit of the ascending regression channel, highlighting overbought conditions.
On the downside, 1.2870 (upper limit of the ascending channel) aligns as first support before 1.2800 (200-day Simple Moving Average) and 1.2750 (mid-point of the ascending channel). Looking north, first resistance could be seen at 1.3000 (static level, round level) before 1.3040 (static level from November).
Fundamental Overview
The positive shift seen in risk mood forced the US Dollar (USD) to stay under pressure midweek, allowing GBP/USD to gather further bullish momentum. News of US President Donald Trump granting the US automative industry a one-month exemption from 25% tariffs imposed on Canada and Mexico, and planning to do the same for some agricultural products, helped the risk mood improve on Wednesday.
In the meantime, Pound Sterling also benefitted from hawkish Bank of England (BoE) commentary. While testifying before the UK Treasury Select Committee on Wednesday, BoE policymaker Megan Greene said it is appropriate to maintain a cautious and gradual approach to removing monetary restrictiveness. "The evidence points against more rapid cuts in the bank rate for me," Greene added.
In the second half of the day, the US Department of Labor will publish the weekly Initial Jobless Claims data. Markets expect the number of first-time applications for unemployment benefits to decline to 235,000 from 242,000. A bigger-than-expected drop in this data could support the USD with the immediate reaction. Investors, however, could refrain from taking large positions ahead of Friday's highly-anticipated February employment report.
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