“¢ Some fresh USD selling helps regain positive traction after the overnight slide.
“¢ Brexit uncertainties/UK politics kept a lid on any follow-through up-move.
“¢ The incoming Brexit headlines might continue to drive sentiment around GBP.
The GBP/USD pair spiked to fresh session tops, around the 1.2820 region in the last hour, albeit quickly retreated few pips thereafter.
The pair finally broke out of its Asian session consolidation phase and regained some positive traction to recover a part of previous session’s sharp fall. A slight risk-recovery, as depicted by strong gains across European equity markets, dented the US Dollar’s relative safe-haven status and was seen as one of the key factors driving the pair higher.
The uptick, however, lacked any strong follow-through in wake of the recent UK political drama over a leadership challenge from within PM May’s own party, though now seems to have lost its relevance after failing to reach the required 48 letters to trigger a no-confidence vote.
Moreover, investors also seemed reluctant to place any aggressive bets and preferred to wait on the sidelines amid some renewed Brexit jitter, especially after Spain threatened to veto the proposed Brexit deal in absence of any clarity over Gibraltar.
Market participants now look forward to any fresh Brexit-related headlines coming out of the UK PM Theresa May’s Brexit meeting today with the European Commission’s Chief Jean-Paul Juncker.
Later during the early North-American session, the US economic docket, highlighting the release of durable goods orders data, will influence the USD price dynamics and produce some meaningful trading opportunities.
Technical levels to watch
The 1.2780-75 region might continue to protect the immediate downside, below which the pair is likely to accelerate the slide towards the 1.2700 handle before eventually dropping to YTD lows, around the 1.2665-60 region.
On the flip side, the 1.2820-25 region now seems to have emerged as an immediate resistance and is followed by the 1.2865-70 supply zone, which if cleared should assist the pair to aim back towards reclaiming the 1.2900 handle.
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