GBP/USD eases from multi-week tops, flat-lined around 1.2730-35 region

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  • GBP/USD struggled to capitalize on its early uptick to fresh multi-week tops.
  • Renewed fears of a no-deal Brexit overshadowed upbeat UK macro releases.
  • A subdued USD price action extended some support and helped limit losses.

The GBP/USD pair seesawed between tepid gains/minor losses through the first half of the trading action on Friday and was last seen trading in the neutral territory, below mid-1.2700s.

Renewed worries about a no-deal Brexit failed to assist the pair to capitalize on its overnight bounce of around 85-90 and a subsequent move to the highest level since June 10. Bulls even shrugged off Friday’s upbeat UK macro data – monthly Retail Sales and flash UK PMI prints.

The UK Retail Sales came in to show a growth of +13.9% for June, while the core sales (excluding auto fuel) stood at +13.5% MoM. Adding to this, the flash version of the UK PMI prints showed that both, the manufacturing and services sector activities quickened its pace of expansion in July.

The data, however, did little to provide any meaningful impetus to the British pound, instead was overshadowed by persistent Brexit-related uncertainties. The latest round of negotiations ended on Thursday without making any significant progress on the post-Brexit trade agreement.

Meanwhile, the downside remains cushioned amid a subdued US dollar demand. The second wave of the coronavirus infections fueled worries that the economic recovery in the US could be grinding to a halt, which kept the USD bulls on the defensive and helped limit losses for the GBP/USD pair.

From a technical perspective, bulls have been showing some resilience at higher levels. However, the attempted positive move lacked any strong follow-through. This, in turn, warrants some caution for before placing any fresh directional bets and might lead to range-bound price action.

Market participants now look forward to the US economic docket, highlighting the release of the flash version of PMI prints. The data might influence the USD price dynamics and produce some short-term trading opportunities later during the early North American session on the last day of the week.

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