- US dollar weakness helped the rebound in the Cable, despite Brexit jitters and risk-off.
- Technical setup suggests that the recovery could be short-lived, with the next resistance near the 1.2950 level.
The GBP/USD pair is seen consolidating the bounce to 1.2920 level, but manages to hold the 1.29 handle, despite a negative opening on the European equities, as the global stocks rout extends into Europe.
The Cable extended the bounce from seven-week lows of 1.2868 on Thursday, as the US dollar weakened against its main competitors, dragged lower by the sell-off in the Treasury yields amid downbeat US earnings reports and global growth concerns.
The spot reached multi-week lows on the back of the renewed Brexit jitters after the UK PM Theresa May’s spokesman noted that the PM had been clear that she didn’t want to enter into an indefinite post-Brexit transition period.
In the session ahead, the negative tone around the European equities could undermine the GBP/USD recovery while the ECB monetary policy decision is likely to have some rub-off effect on the pound, as the UK docket remains empty for today.
GBP/USD Technical levels
FXStreet’s Analyst Haresh Menghani, notes: “The downfall seems more likely to get extended further towards testing the 1.2800 round figure mark with some intermediate support near the 1.2850-45 region. On the flip side, any meaningful recovery back above the 1.2900 handle might now confront immediate resistance near mid-1.2900s, above which a bout of short-covering could lift the pair back towards the 1.2975-80 supply zone en-route the 1.30 handle.”
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