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  • GBP/USD has been testing  below the 1.31 handle and marked a fresh low of 1.3083 as the dollar marches forward in pursuit of higher grounds where  it wants to stabilise following a strong Durable Goods number and inline GDP Q2 data.

GBP is soft in Thursday’s NA session, (EUR/GBP bid from 0.8884 lows to space back on the 0.89 handle). GBP/USD is now taking on the consolidation support area between 21st Sep and 23rd Sep business while below the 21-hr SMA and testing the fragility of the BB as RSI 14 runs into oversold territory at 30 – (however, it can run to support at 18, so price has room to go). GBP/USD bears can target the 38.2% fibo around 1.3050, but it  needs to break clear of the 100-4hr SMA at 1.3084 first.  

With respect to Brexit, where the price hangs in the balance of, analysts at Scotiabank explained that comments from French President Macron have been constructive, offering support for the U.K.’s return to the EU in the event of a second referendum ‘remain’ vote.

The analysts also explained that the BoE rate expectations remain largely unchanged, pricing roughly 20bpts of tightening by August 2019. “Measures of sentiment are bearish as risk reversals suggest a considerable rise in the premium for protection against GBP weakness vs. both the USD and EUR.”

As far as dollar strength goes, the US data, where it derives today’s rally, come as follows:

GBP/USD levels

“Last week GBP/USD rose to its current September high at 1.3298 before forming a minor top and slipping to 1.3054. This week recovery is seen from this level. Below it lies the 55-day moving average at 1.3000. Currently the technical signals are conflicting – and for now we will attempt to buy the dip. We will maintain an upside bias above the 55-day ma. Were last week’s high at 1.3298 to be exceeded, the 1.3363 July high would be in focus. A move above the 1.3363 July high would imply a deeper corrective phase to the 1.3473/1.3520 June high and 200-day moving average,” the analysts  at Commerzbank explained.