“¢ A subdued USD price action triggers the initial leg of rebound.
“¢ Stronger UK wage growth data provides an additional boost.
“¢ Brexit uncertainties might keep a lid on any meaningful up-move.
The GBP/USD pair built on its steady intraday climb and was now seen extending the positive momentum further beyond the 1.2900 handle.
With the US Dollar holding on the defensive through the mid-European session, bullish traders took cues from stronger than expected UK wage growth data, a key takeaway from today’s mixed UK employment details.
A stronger than expected rise in the UK average earnings index (excluding bonuses), recording a growth of 3.2% during three months to September – the highest since the end of 2008, fueled expectations that the Bank of England would be looking to hike rates again fairly soon and provided a minor lift to the British Pound
As James Smith, Developed Markets Economist at ING, explains: “Momentum has really picked up over recent months, and reinforces the idea that firms are having to pay increasingly high premiums to retain and attract talent.”
However, mounting uncertainty surrounding Brexit, given that the likelihood of an EU Brexit summit might have been pushed to December 13-14, might turn out to be the only factor keeping a lid on any runaway rally, at least for the time being.
In absence of any major market moving economic releases from the US, the incoming Brexit headlines might continue to play a key role in driving sentiment surrounding the British Pound and produce some meaningful trading opportunities.
Technical levels to watch
Any subsequent up-move is likely to confront fresh supply near the 1.2945-50 region, above which the pair seems all set to aim towards reclaiming the key 1.30 psychological mark.
On the flip side, retracement back below the 1.2900 handle now seems to find immediate support near the 1.2875-70 region, which if broken might accelerate the fall back towards the 1.2830 area.
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