GBP/USD: Downside opening up towards 1.2250 amid risk-off?

The GBP/USD pair is seen failing several attempts to extend the recovery above 5-DMA (1.2284), as markets continue to remain risk-averse amid negative treasury yields and European equities.

GBP/USD eyes 1.2250?

After being capped below 1.2300 for most part of the Asian session, the GBP/USD pair faced fresh offers in early Europe and hit a fresh daily low of 1.2260 post-European open, as negative start to the European markets triggered a fresh risk-aversion wave and hurt the higher-yielding currency GBP.

However, the spot is now seen meandering near daily troughs as the USD selling appears to stall, with markets preferring to hold the reserve currency amid renewed political tensions. Earlier on the day, reports hit the wires that four Ballistic missiles were launched by North Korea into Japan waters. This move was immediately protested by the Japanese PM Abe.

Moreover, the GBP bulls remain on the back foot ahead of the UK Annual Budget release due on Wednesday, with the UK finance minister Hammond noting over the weekend, “I regard my job as Chancellor as making sure that our economy is resilient, that we have got reserves in the tank."

The immediate focus now remains on the BOE MPC member Hogg’s speech and US factory orders data due later on Monday.

GBP/USD Levels to consider

At 1.2266, the resistances are lined up at 1.2304/05 (daily high/ Classic R1) and 1.2350/69 (round figure/ 10-DMA) and below that at 1.2400/10 (zero figure/ 50-DMA). On the flip side, the resistances are aligned at 1.2250 (Jan-end) and 1.2212 (6-week low) and below that at 1.2198/97 (Jan 1/ Dec 25 low).

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