“¢ The prevalent USD selling bias helps recover early lost ground.
“¢ Brexit uncertainties continue to undermine GBP and cap gains.
The GBP/USD pair managed to recover around 50-pips from daily lows, albeit seemed struggling to build on its momentum further beyond the 1.2900 handle.
After an initial downtick to an intraday low level of 1.2662, the pair regained some traction and was being supported by the prevalent US Dollar selling bias. Despite a modest uptick in the US Treasury bond yields, the prevalent risk-on mood, triggered by easing concerns over global trade tensions, held the USD bulls on the defensive and was seen as one of the key factors behind the pair’s intraday rebound.
However, continuing fears over a no-deal Brexit continue to undermine the British Pound and kept a lid on any meaningful up-move for the major, at least for the time being. In the latest Brexit-related headlines, German foreign minister Heiko Maas was noted saying that a hard Brexit is not off the table yet, while the UK PM Theresa May said that a no-deal Brexit was not the end of the world.
Currently hovering around the 1.2895 region, today’s subdued price action could also be attributed to absent market moving economic releases from the UK. Moreover, the US economic docket also features some second-tier data – goods trade balance data and the Conference Board’s consumer confidence index might also fail to provide any meaningful directional impetus.
Technical levels to watch
On a sustained move beyond the 1.2900 handle, the pair is likely to aim towards testing last week’s swing high level of 1.2936 en-route its next major hurdle near the 1.2955-60 region. On the flip side, the 1.2860 area now seems to have emerged as an immediate support, which if broken might turn the pair vulnerable to head back towards challenging the 1.2800 round figure mark.
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