GBP/USD: Recovery finds resistance at 1.3130

• GBP/USD recovery fueled by USD correction and limited by 1.3130.
• US dollar corrected lower after Thursday’s rally and despite US data.

The GBP/USD pair erases daily losses during the last hours and despite US economic data, it was still trading almost a hundred pips below yesterday’s highs.

Supported by 1.3080/1.3100

The slide from levels on top of 1.3200 found support today at 1.3080. From that area, GBP/USD bounced to the upside and recently printed a fresh daily high at 1.3129. As of writing was trading at 1.3110/20, modestly higher for the day.

The recovery was boosted by a correction of the US dollar after Thursday’s rally. The move took place even after positive US data. The economy expanded at 4.1% during the second quarter, the highest rate since 2014. Price indexes rose below expectations. On another report, the Consumer Confidence Index elaborated by the University of Michigan rose to 97.9 in July from 97.1. The greenback failed to receive support from the economic numbers, but the correction so far seems limited.

The intraday tone on GBP/USD looks modestly biased to the upside but on a wider perspective, short-term bearish pressures are still seen. A break below 1.3080 is likely to clear the way to more losses. “The GBP/USD should close below 1.3100 representing 38.2% Fibonacci retracement level of the post-Brexit fall from 1.5020 to 1.1940 to target lower levels with the near-term target of 1.3000 and then 1.2670, representing 26.3% Fibonacci retracement of a post-Brexit slump”, wrote Mário Blaščák, FXStreet’s Editor-in-Chief.

Technical levels

To the downside, support levels might be located at 1.3105 (20-hour moving average), 1.3080 (Jul 28 low / Jul 19 high) and 1.3040. To the upside, resistance could be seen at 1.3130 (Jul 28 high), 1.3180 (Jul 12 low) and 1.3200.