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  • Renewed upside loses strength amid mixed UK macro releases.
  • Awaits US pending home sales data for fresh incentives ahead of the key BOE’s ‘Super Thursday’.

The GBP/USD pair moved-off highs, although remains well bid above the 1.31 handle amid resurgent US dollar supply and weaker European equities.

GBP/USD looks neutral in the near term – UOB

The spot found fresh buyers once again just under the 1.31 handle and staged a 40-pips bounce before running into offers near the 1.3140 region to now trade back below the 5-DMA at 1.3127.

The bounce in the major was mainly driven by a fresh bout of the US dollar selling across the board while the rise in oil prices also buoyed the sentiment around the risk-currency, the GBP.

However, the upside lacked follow-through, as losses on the European equity markets weigh negatively on Cable. Additionally, mixed second-liner UK economic data also kept a check on the gains. The UK net lending to individuals data beat expectations while the money supply data surprised markets to the downside.

Further, the pound also remains weighed down by the latest comments by the Bank of England (BOE) Governor Carney, in which he warned over a disorderly Brexit. Despite the latest leg down, the pair may continue to derive support from the increased expectations of a BOE rate hike this Thursday.

In the day ahead, the US dollar dynamics and risk trends will continue to drive the sentiment around the GBP/USD pair until the release of the US pending home sales data at 1230 GMT.

 GBP/USD Technical Levels

Slobodan Drvenica at Windsor Brokers notes: “Falling and widening hourly cloud (1.3128/51) marks solid  resistance, which should ideally limit upticks and guard upper trigger at 1.3176 (converged 20/30SMA’s). Only break above 1.3219 (upper boundary of bear-channel) would sideline bears. Central banks are in focus this week, with  Fed  coming on Wednesday and expected to signal the third rate hike this year in September’s FOMC meeting, while the BoE’s MPC is meeting on Thursday, with wide expectations for a quarter-point rate hike.

Res:  1.3151; 1.3176; 1.3219; 1.3263.

Sup:  1.3085; 1.3071; 1.3055; 1.3000.”