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  • Growing speculations on pre-Christmas UK election exerted some pressure.
  • The USD benefitted from a fall in the Euro and added to the intraday slide.
  • Traders now eye US durable goods orders for some short-term opportunities.

The GBP/USD pair faded an intraday bullish spike and quickly retreated around 75 pips during the early European session on Thursday.
The pair initially edged higher and built on the previous session’s late rebound, albeit the uptick lacked any strong follow-through and quickly ran out of the steam near mid-1.2900s amid risk of a snap election in the UK.

Weighed down by risk of UK snap election

The latest comments by a senior UK government source reinforced speculations on the pre-Christmas election and turned out to be one of the key factors that exerted some downward pressure on the British Pound.
Adding to this, a modest US Dollar uptick, primarily on the back of an intraday pullback in the shared currency, further collaborated to the pair’s sudden drop over the past hour or so to an intraday low level of 1.2876.
Meanwhile, the downside seems more likely to remain limited as investors are likely to wait for the EU’s final verdict, not expected until Friday, on Johnson’s request to extend the Brexit deadline until January 2020.
This coupled with the fact that the risk of a no-deal scenario has been largely been neutralized in the recent past, the intraday downtick might continue to attract some dip-buying interest and remain limited.
Hence, it will be prudent to wait for a strong follow-through selling before confirming that the pair might have actually topped out in the near-term and positioning for any further near-term corrective slide.
Later during the early North-American session, the US economic docket – highlighting the release of durable goods orders data – will also be looked upon to grab some short-term trading opportunities.

Technical levels to watch