• GBP/USD retreats from intraday high to snap two-day uptrend.
  • British labor strike, UK PM Sunak’s push back to childcare reform joins geopolitical concerns to weigh on Cable.
  • Holidays in UK, US restrict market moves as 2023 begins.
  • Final readings of UK PMIs for December, US employment data and FOMC Minutes are this week’s crucial catalysts.

GBP/USD takes offers to pare intraday gains around 1.2080, teasing bears for the first time in three days, even as the holiday mood limits the Cable pair’s immediate moves.

Multiple negatives surrounding the UK seemed to have lured the GBP/USD bears of late. Among them, British Prime Minister (PM) Rishi Sunak’s shelving of the plans for a major overhaul of the childcare system aimed at saving parents money and helping them return to work, per The Telegraph, gains major attention.

On the same line are the updates surrounding the UK labor strikes as The Times report that the British ministers think unions will run out of money and have to back down but the unions reject the claim, accuse govt of sabotage & say they have financial firepower. Additionally, the UK’s sanctioning of Russian military commanders and Iranian businessmen, as well as the British Defense authorities’ request for more funding, also seemed to have probed the GBP/USD buyers of late.

Elsewhere, downbeat prints of the US data and the year-end consolidation dragged the US Dollar Index (DXY) to refresh a seven-month low the previous day. That said, Chicago Purchasing Managers’ Index crossed the market consensus of 41.2 and the 37.2 previous readings to print the 44.9 figures for December. Even so, the activity gauge signaled contraction for the fourth consecutive month.

Against this backdrop, Wall Street closed with mild losses but the US Treasury bond yields recovered, which in turn probes the GBP/USD bulls who previously held the reins.

Looking forward, a light calendar and off in multiple markets could offer a dull Monday but the British political plays could entertain the GBP/USD pair traders.

For the week, final readings of the UK’s activity numbers for December and the US employment report for the said month will be important for the GBP/USD pair traders to watch for clear directions. Also crucial will be the Minutes of the latest Federal Open Market Committee (FOMC) meeting mid the Fed’s rejection of dovish bias.

Overall, GBP/USD bulls seem to run out of steam but the lack of marker participation seems to limit the pair’s moves.

Technical analysis

A 200-SMA level around 1.2100 precedes the stated triangle’s upper line near 1.2110 to restrict short-term advances of the GBP/USD prices. It’s worth noting, however, that the bullish MACD signals and the firmer RSI (14), not overbought, join the 1.2000 psychological magnet to limit the Cable pair’s immediate downside.

This article was originally published by Fxstreet.com.Read the original article here.

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