- Summary:
- Safe-haven demand occasioned by the fall in crude oil prices has put the GBPUSD on offer, selling off by close to 150 pips.
The GBPUSD is now sharply lower in the 2nd trading day of the week, as US Dollar safe-haven demand is taking a toll on the cable. This morning’s employment data came in mixed, but a strong bullish bias for the USD on the back of yesterday’s Antipodean-style fall of the WTI crude oil price benchmark is driving the pair lower.
As at the time of writing, the USD was 1.24% lower, translating to a drop of 150 pips on the GBPUSD. The pair now trades at 2-week lows and with bears firmly in control at the moment, the pair seems well on the way to a 2-day losing streak.
Speculation about the health of North Korea Leader Kim Jong Un following heart surgery also added to the safe-haven demand for the USD. However, South Korea and China have debunked these reports.
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Technical Outlook for GBPUSD
With no high impact data scheduled out of the UK until Thursday morning’s PMI data, the pathway is clear for trading to proceed on the basis of technical parameters. The immediate downside target for today’s price decline is the 1.22006 price level, which is the site of the prior lows of October 9/10 2019, and reinforced by the lows of March 16 and April 3, 2020. The pair needs to break down the ascending channel seen on the daily chart using the double candle closing penetration for the decline to this price level to come to fruition.
If the pair breaks down this level, the pair will have a clear path towards 1.21210 and possibly a multiply-tested price level, 1.20005.
On the flip side, a bounce from 1.22006 allows the pair retest the 1.23685 price level, with 1.25771 and 1.27558 waiting in the wings.