• US-China trade war fears weigh on the USD and helped the pair to regain traction.
• Further gains, however, remain capped ahead of a crucial Brexit meeting.
• Traders now eye the key release of the US jobs data for some fresh impetus.
The GBP/USD pair held on to its positive tone through the mid-European session, albeit has retreated around 20-25 pips from an intraday high level of 1.3253.
The prevalent selling bias surrounding the US Dollar helped the pair to stall overnight sharp retracement from 1-1/2 week tops and catch some decent bids near the 1.3200 handle. A day after the minutes from the last FOMC meeting showed that policymakers generally supported gradual rate increases, the new US tariffs on $34 billion worth of Chinese goods came into effect and forced the USD bulls to move back on the defensive mode.
The up-move, however, lacked any strong follow-through and remained capped as investors now look forward to the Friday’s crucial Brexit meeting at Chequers. Traders also seemed reluctant to place aggressive bets ahead of today’s important release of the keenly watched US monthly jobs report (NFP), which should influence the USD price dynamics and eventually produce some meaningful trading opportunities.
Technical levels to watch
Bulls will be eyeing for a sustained move beyond the 1.3275-80 immediate support zone, above which the pair could easily surpass the 1.3300 handle and head towards testing the 1.3330-35 supply zone.
On the flip side, the 1.3200 handle might continue to protect the immediate downside, which if broken might accelerate the fall towards 1.3140 horizontal support en-route the 1.3100 round figure mark.