GBP/USD supported at 1.4120 amid cross-driven flows, risk-on
- Cross-driven flows underpin as China Xi’s comments lift sentiment.
- BOE Haldane’s speech and US PPI data to play second fiddle to risk trends?
The GBP/USD pair is seen extending its overnight sideways theme into early European trading, as the higher-yielding pound fails to benefit from the persisting risk-on market profile induced by the Chinese President Xi’s calm stance on the US-China trade row.
The range trade in the spot is likely to extend in the session ahead, as broad-based US dollar rebound amid improved risk appetite is expected to keep the upside capped while strong gains seen in the GBP/JPY cross, in response to broad JPY selling, will continue to offer support to the bulls.
“Moving ahead, investors now look forward to the BoE Chief Economist Andy Haldane's scheduled speech, which might provide some impetus ahead of the latest US PPI print, due later during the early NA session. The focus, however, would remain on Wednesday's consumer inflation figures and minutes of the last FOMC meeting, which might influence Fed rate hike expectations and eventually help determine the next leg of the directional move,” FXStreet’s Analyst Haresh Menghani notes.
GBP/USD levels to watch
According to Brian Twomey, President at Brian's Investment, “A large gray area exists from 1.4101 to 1.4203 and this represents an uncertain danger zone. GBP should actually trade to 1.4203 then 1.4280 but it's not ready to travel higher. At 1.5226 and 1.5276 are slightly oversold while 1.3074 and 1.3325 are severely overbought and this creates the 1.4101 to 1.4203 undecided zone.”
“Sell rallies means below 1.3926 to many and massive supports at 1.3878, 1.3870, 1.3862 and 1.3765. Should GBP ever break through this zone then next comes 1.3654 and 1.3613 and on to 1.3325. Below 1.3977 and 1.3926, breaks at 1.3800's will take time. The most important point is 1.3878 to travel lower,” Brian adds.