GBP/USD headed to 1.3000 amid sell-off in European equities

• Bears remain in control amid risk-off, UK Q2 GDP miss.
• Looks to test 1.3000 heading into the US core PCE data, as USD remains stronger.

The GBP/USD pair is making headways towards the 1.3000 support area, as the bears extend control amid widespread risk-aversion, in response to meltdown in the European equities led by the Italian budget crisis.

Focus on US core PCE and risk trends

The post-FOMC rally in the US dollar gathered steam amid increased demand for the safe-haven US dollar, as Italian budget conflict gets uglier and weighs heavily on the risk assets such as the pound. The USD index hits two-week tops of 95.29, up +0.42% on the day, largely unperturbed by the sell-off in the Treasury yields.

Meanwhile, the sentiment around the pound also remains undermined by looming Brexit uncertainty while below estimates UK second quarter final GDP figures also added to the weight on the Cable.

The downside bias is likely to extend in the day ahead, as attention now shifts towards the US core PCE price index due later at 1230GMT. Also, the sentiment on the Wall Street could help determine the next move in the spot.

GBP/USD Technical Levels

Slobodan Drvenica at Windsor Brokers, noted: “Weakening Euro continues to influence pound and keep bearish scenario favored. Weekly close below 1.3054 pivot is needed to complete failure swing pattern on daily chart and generate strong bearish signal for extension of pullback from 1.3297 peak   towards psychological 1.30 support, reinforced by converged 30/55SMA’s. Broken 100SMA (1.3134) is expected cap extended upticks. Res:  1.3090; 1.3121; 1.3134; 1.3180. Sup:  1.3054; 1.3032; 1.3000; 1.2963.”