GBP/USD extends losses since yesterday after clocking 1.3582 high, the cable is still on a selloff mood on Wednesday dipping to 1.3512 low, still testing 10-EMA with expectations for a failure.
Technically, the cable is still trading inside Jan 3rd which is still considered engulfing daily candle and yesterday, the pair closed below 5-EMA which makes GBP/USD next target is 10-EMA, still testing the level and in case market closed below 1.3515-20 it, then next destination will be aimed at 20-EMA at 1.3450. Currently, GBP/USD is trading 1.3517 intraday.
As for fundamentals, lot of factors still weighs on the Pound including PM May's struggle with UK ministers (Justin Greening) along with Brexit resurfacing during this week. Apparently, May is having hard time to form a reliable team which is capable to deal with last year's, still ongoing Brexit negotiations.
In a joint article for Frankfurter Allgemeine, Philip Hammond and Brexit Secretary David Davis, two senior UK ministers sent their warnings to the EU union is taking a risk by opening a door for another global financial crisis in case the EU threw sticks in the wheel in order to conduct a good Brexit deal. (Bloomberg)
As for macro events, UK is set to release Manufacturing Production m/m shortly along with November's Goods Trade Balance and it is expected that the UK will record a large deficit by £2.6B.
GBP/USD Technical overview:
Closing price: 1.3539
Target price: 1.3770 ?
Resistance: 1.3580 , 1.3610, 1.3680
Support: 1.3500-20, 1.3480, 1.3434*
Trend: Sideways / Up
Trend reversal price: 1.3434*
Comment: Overall the market is signaling an upturn from weeks of congestion and poised for rallies to challenge for a breakout over previous swing highs, possibly launching moves towards 1.3770. Near term action may yet work on flagging congestion, but suspect trade to hold previous congestion at 1.3480-. Only a close under 1.3434* triggers a reversing turn back to lower prices. A surge over 1.3580 could spark an upturn from flagging action.