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GBP/USD Outlook: Cable Dips After Repeated Rejection At Psychological 1.40 Barrier

Cable fell one full figure in European trading on Friday, following repeated rejection at psychological 1.40 barrier, deflated by stronger dollar on rise of US yields, with UK economy’s contraction in January (although less then expected) contributed to pound’s fresh weakness.

Dip was so far contained by converged 5/10DMA’s (1.3912) but key support at 1.3780 (rising 10WMA) is under pressure and break here would lead to further weakness.

Negative momentum studies on daily chart keep the near-term structure fragile, however moving averages are still in positive setup and partially counter downside risk.

Weekly studies remain bullishly aligned with the action on track for bullish weekly close after two weeks in red and potential formation of bullish engulfing that would add to positive signals.

Expect strong direction signals on break of pivotal points at 1.3780 and 1.4000, with close below 1.3780 to signal extension of pullback from 1.4238 (the highest since Apr 2018) and expose support at 1.3641 (Fibo 38.2% of 1.2675/1.4238).

Conversely, lift through 1.40 barrier would signal an end of 1.4238/1.3778 correction.

Res: 1.3950, 1.4000, 1.4062, 1.4129
Sup: 1.3912, 1.3780, 1.3763, 1.3700