GBP/USD creeps back into 1.33 as risk recovery drags the GBP along for the ride

• Sterling looking to capture further territory in broad-market recovery.
• Mid-tier data for Thursday gives the GBP a chance to develop some bullish momentum if figures can beat.

The GBP/USD is trading just above the 1.3300 handle ahead of the London market session, continuing to lift tentatively after declining rapidly from April’s high.

The Sterling has found some much-needed support from 1.3204 after declining over  8% from April’s high of 1.4376. A lack of bullish confidence is likely still present, as the GBP rebounds against the Dollar in conjunction with broader market sentiment. Fears over Italy heading into a new round of elections and disrupting stability in the Eurozone have ebbed for now, and risk appetite has stepped back into the markets.

Thursday sees a round of data for the UK, beginning with the Nationwide Housing Prices measure for the month of May dropping at 06:00 GMT, with the y/y figure expected to tick up slightly from 2.6% to 3.0%. Shortly after that, at 08:30 GMT, will be a mixed bag, with April’s Consumer Credit (forecast £1.63 billion, prev. £0.254 billion), m/m Net Lending to Individuals (expected £5.2 billion, prev. £5.4 billion), and Mortgage Approvals for April, forecast at 63 thousand compared to the previous reading of 62.914 thousand, a very minor uptick.

GBP/USD levels to watch

The Sterling remains exposed to further selling, and as  FXStreet’s Chief Analyst Valeria Bednarik  noted, “in the short term, the risk remains skewed to the downside as in the 4 hours chart, the pair is unable to surpass its 20 SMA, hovering a few pips below it, while technical indicators continue heading nowhere within negative territory. The pair is holding barely 80 pips away from its yearly low ahead of a fresh catalyst, but today’s behavior has shown that a recovery doesn’t depend on dollar’s weakness but on Pound’s possible strength.”

Support levels: 1.3245 1.3200 1.3160  

Resistance levels: 1.3315 1.3350 1.3400