GBP/USD recovery attempts remain capped below 1.2600 so far

• Pound’s recovery attempts are likely to meet strong resistance at 1.2600.
• The weak ADP report failed to hit the US Dollar.
• The pair is under pressure after confirming a double-top at 1.2730.

The Pound’s is trying to regain some ground in early European session after bouncing from session lows at 1.2540 although 1.2600 seems a tough resistance area.

Sterling’s bears remain in control after the pair accelerated its reversal from three-month highs above 1.2700 on Thursday. The sourer market sentiment on heightened fears about a global economic slowdown in 2024 is underpinning support on the safe-haven Dollar.

The weaker US ADP employment report failed to dampen confidence in the USD, which is on track to a significant recovery this week, as bets of monetary easing extend to most of the world’s major central banks. Investors are now looking at Friday’s Nonfarm Payrolls report for more cues into the US labour market.

In the UK BoE Governour Bailey maintained the need to keep interest rates at the current levels for some time although he mentioned the risks for financial stability and noted the challenges to the global economy from the uncertainty about China.

The technical picture is bearish. Below 1.2600, the pair has confirmed a double-top at 1.2730 increasing negative pressure towards 1.2517 and 1.2460.
 

Technical levels to watch