- GBP/USD fails to hold to gains and drops back below 1.2900.
- US dollar gains momentum after US data while pound remains under pressure on Brexit.
The GBP/USD pair rose earlier today to test last week highs but failed to break above 1.2930 and pulled back after the release of US data, erasing daily gains.
Cable peaked at 1.2934, the strongest level since last Wednesday and the fell more than 60 pips weakened by a correction of the greenback that started after the release of US consumer confidence data. The CB Consumer Confidence Index hit the highest level in 18 years, showing numbers above expectations. “Current optimism continues to be a reflection of the tightening labor market, as the share of consumers stating jobs as plentiful was little changed, and those who see jobs as hard to get fell 2.1 points. This pushed the labor differential up to its highest level since 2001, which is consistent with the near record low unemployment rate”, said analyst at Wells Fargo.
GBP/USD bottomed during the US session at 1.2869 and as of writing was trading at 1.2880/85, marginally below the level it closed yesterday. The correction of the greenback against other major currencies was less intense.
The pound remains weak in the market amid concerns about a “no deal” regarding Brexit. The UK government is presenting plans for what could happen if a deal is not reached before March. PM May said today it “would not be the end of the world”. Without clarification, Brexit will continue to be a relevant source of uncertainty and also of volatility.
GBP/USD levels to watch
To the downside, below the daily low at 1.2860, the next support could be seen at 1.2835/40 (uptrend line from August low). A break below would clear the way for a test of 1.2800. On the flip side, the immediate resistance is the 1.2895/1.2900 area (Aug 27 / Asian session high) followed by 1.2930/35.
Share
