GBP/USD goes into consolidation near 1.29, will there be another leg down?

• Brexit vote reportedly won’t be taking place next week.
• Durable goods orders in the U.S. surprised to the upside.
• US Dollar Index retreats from 2019 highs, looks to close above 1.29.

The GBP/USD pair continued to push lower for the eighth straight trading day  on Thursday and touched its lowest level since mid-February at 1.2865 before staging a technical correction in the NA session. At the moment, the pair is down 10  pips on the day at 1.2893.

Earlier today, the leader of House of Commons, Andrea Leadsom, told reporters that the parliament business next week didn’t have the Brexit bill, reaffirming the lack of progress in cross-party talks with the opposition Labour party and weighed on the British pound. Meanwhile, the only data from the UK on Thursday showed a rare positive sign regarding economic activity.

Its latest Distributive Trades Survey, the Confederation of British Industry said that retail sales grew for the first time since November 2018 in the year to April. Commenting on the publication, “It’s encouraging to see retailers with more of a spring in their step than in recent months. The recent pick up in real wages is a welcome support to the sector, making the pound in people’s pockets stretch that bit further,”  Rain Newton-Smith, CBI Chief Economist, said.

On the other hand, the broad-based USD strength, which has been the primary driver of the pair’s price action, started to fade away despite the upbeat durable goods orders data and helped the pair pull away from its multi-month lows. However, the DXY’s pullback seems to be a technical reaction to the sharp upsurge witnessed this week and suggest that it’s likely to remain shallow. At the moment, the index is up 0.13% on the day at 98.18.

• US: Durable goods orders increased by 2.7% vs 0.8% expected.

On Friday, the U.S. Bureau of Economic Analysis will publish its first estimate of the first-quarter GDP growth. Analysts expect the GDP to expand by 2.1% in Q1 following 2018-Q4’s 2.2% growth. If we see a higher-than-expected reading, we could see investors start pricing a hawkish shift in the FOMC’s policy outlook and witness another leg down in the pair.  

Technical levels