GBP/USD rises above 1.2150 late on Friday, still suffers worst weekly slide in two months

• Pound looks for lowest weekly close in decades versus US Dollar.  
• Cable rises modestly on Friday, remains under pressure on Brexit fears.  

The GBP/USD pair rose modestly on Friday and near the end of the week was trading slightly above 1.2150, still down for the week and about to post the lowest weekly close in decades. The negative trend for the pair continues: it dropped in five out of the last six weeks, losing 400 pips.  

Between Brexit and tariffs

On Thursday, GBP/USD bottomed at 1.2078, the lowest level since January 2017 and then stabilized above 1.2100. On Friday, on the back of a weaker US Dollar rose back above 1.2150. The greenback failed to benefit versus majors despite the US employment report. Payrolls increased by 164K in line with expectations and wages rose 0.3% MoM.  

Trade tensions made a comeback after US President Trump announced more tariffs on Chinese imports and China pledged that it would retaliate. Comments regarding the subject will likely continue to influence markets. Regarding data, next week in the US, the ISM Non-Manufacturing PMI and the PPI index are due.  

In the UK its all about Brexit. Although next week the UK GDP report will be released, the deal/no-deal Brexit continues to be a key driver for the Sterling. The uncertainty remains elevated, and a hard Brexit in October 31st seems more likely than before.  

Technical outlook  

Yohay Elam, an analyst at FXStreet point out the daily GBP/USD chart implies a temporary correction before another leg lower. “The Relative Strength Index on the daily chart is below 30 – indicating oversold conditions and suggesting an upward correction. Nevertheless, downside momentum remains intact, and the pair is trading below the 50, 100, and 200-day Simple Moving Averages”,  

Regarding levels, Elam sees 1.2120 as a key support followed by the fresh 2019 low of 1.2076. While to the upside, he notes some resistance awaits at 1.2250, which was a swing high in late July followed by the round number of 1.2300, a 2017 resistance worth watching.