The GBP/USD pair filled weekly bearish gap opening and jumped to 1.2200 neighborhood before retracing few pips to currently trade around 1.2180 level.
A broad based greenback retracement helped the pair to recover from early weakness to mid-1.2100s led by weekend comments from French President Francois Hollande and German Chancellor Angela Merkel, which added to the ongoing market concerns over 'hard Brexit'.
As Carol Harmer, Founder at charmertradingacademy.com, notes, "We have based just in front of the short term 23.6 Fib level of 1.2124….Because we have based short term there is scope for a recovery today….The recovery is I think just going to present better levels to sell and therefore we cannot get carried away with the fact that we should see rallies…."
Today's US economic docket features the release of Empire State Manufacturing Index, Capacity Utilization Rate and Industrial Production data. Later during NY trading session, speeches from BOE Deputy Governor Ben Broadbent and Federal Reserve Governor Stanley Fischer might provide some impetus for the GBP/USD traders.
Important technical levels
Harmer further writes, "Now we do have small resistance at 1.2215 today and really it is only above 1.2230 where it may get a small reprieve and then post rallies to 1.2280 area….again we are sellers on strength to here and we would only be looking to reverse if above 1,2330…."
"Now what happens if below 1.2120….well we know that the previous reaction low was 1.1973… The market held 1.1973 and rallied higher…so we have to use this a a benchmark for re-selling Cable…If we do lose 1.1960 then I think we will see further declines and 1.18 would be the initial target….Bear in mind we still have 1.15 as a viable targeted area…."