“¢ Comments by BoE’s Haldane prompt some aggressive GBP short-covering.
“¢ A modest USD retracement remains unabated after weaker US GDP print and remains supportive.
The GBP/USD quickly recovered over 50-pips from fresh 7-1/2 month lows touched in the last hour and is now looking to build on the momentum beyond the 1.3100 handle.
The latest leg of a sharp spike over the past hour or so could be attributed to upbeat comments by BoE chief economist Andy Haldane, saying that the UK central bank would have raised rates in May if data held firm. He further added that UK’s productivity is the greatest challenge now and sees tight labor market to mount pay pressures.
Against the backdrop of a modest US Dollar retracement from 11-month lows, further weighed down by a downward revision of the US GDP growth figures, the comments provided some immediate respite for the GBP bulls and prompted some aggressive short-covering move.
It, however, remains to be seen if the up-move is backed by any genuine buying or is solely led by short-covering as investors await fresh Brexit headlines coming out of the key EU summit.
Technical levels to watch
Any subsequent up-move is likely to confront immediate resistance near the 1.3120-25 region, above which the momentum could further get extended back towards the 1.3170-75 supply zone. On the flip side, mid-1.3000s now becomes an immediate support to defend, which if broken might turn the pair vulnerable to break below the key 1.3000 psychological mark.
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