GBP/USD accelerates recovery as US dollar tumbles

• GBP/USD off monthly lows, as DXY turns negative.  
• Cable rises back above 1.2800, easing the negative tone.

The GBP/USD pair rebounded on Friday, during the US session and moved off the 2-month low it reached earlier at 1.2775. The trend continues to point to the downside, but cable trimmed losses as the US dollar rally lost momentum.  

The pair is trading at the daily high at 1.2838, after rising more than 50 pips from the lows. The move to the upside was triggered by a correction of the US dollar across the board.  

US Q3 data failed to boost the greenback. The headline beat expectations but details fail to impress markets. Also, the US dollar reversed sharply on the back of a rally in US bonds. The 10 -year yield fell to the lowest since early October to 3.06%. Equity prices in Wall Street resumed the decline and the Dow Jones was falling more than 1.50%, at monthly lows.  Regarding the pound, Brexit concerns and Bank of England expectations remains a key driver, but today, the US dollar was the main driver of price action.  

GBP/USD Levels to watch

The strong bounce from 2-month lows could signal that a short-term bottom is in place at least for a few days, signaling some consolidation ahead. The bearish pressure is likely to emerge again if cable drops back under 1.2800.  

If the recovery extends, resistance levels might be seen at 1.2840 followed by 1.2865 (Oct 24 low).  On the flip side, immediate support might lie at 1.2810 (intraday level / 20-hour moving average), followed by 1.2775 (Oct 26 low) and 1.2750.  

Despite today’s gains, GBP/USD is having the worst week since August, after ending a consolidation phase of trading around 1.3100 for weeks.