Will GBP/USD bulls be able to defend the weekly 50-MA support of 1.2660?

GBP/USD printed a weekly low of 1.2589 on Wednesday before BoE Chief Economist Andy Haldane’s hawkish comments pushed the pair higher to 1.2710. 

UK Prime Minister Theresa May’s visit to Brussels failed to move the pair in a big way on Thursday. The spot traded around 1.27 levels in the Asian session today. The weekly 50-MA offers support at 1.2660. 

Bearish exhaustion below weekly 50-MA

For three weeks now (including this week), the sellers have failed to keep the pair below weekly 50-MA. On the weekly chart, we clearly candles with long tails below the weekly 50-MA, suggesting dip demand/bearish exhaustion. 

Risk-on may weigh over GBP/USD

Oil recovery may lead to risk-reset in the markets and yield a steeper treasury yield curve and a strong US dollar. Thus, the GBP / USD pair may end the week below the 50-week MA if the oil recovery gathers steam. 

On the other hand, a fresh sell-off in oil would yield a flatter yield curve and keep the dollar bulls at the bay, thus helping the GBP bulls defend the weekly 50-MA support.

Fed speak

St. Louis Fed President James Bullard, Cleveland Fed President Loretta Mester, and Fed governor Jerome Powell are likely to offer more insights into the future rate hike plans. The Cable may close below the weekly 50-MA if the policymakers defend Fed’s decision to maintain the outlook for three rate hikes this year despite weak inflation. The US preliminary manufacturing PMI is unlikely to move the USD pairs in a big way. 

GBP/USD Technical Levels

Immediate support is seen at 1.2675 (Asian session low), which, if breached, would open doors for 1.2633 (100-DMA) and 1.2589 (June 21 low). On the higher side, breach of resistance at 1.27 (zero levels) would open up upside towards 1.2755 (Apr 21 low) and 1.2769 (May 31 low).