GBP/USD headed to Tuesday’s lows at 1.3070 ahead of US GDP

• Brexit jitters, US dollar strength knock-off Cable towards weekly lows.
• Further downside opening up, as US Q2 GDP figures could trigger a fresh USD rally.

Following a calm Asian session, the GBP/USD pair witnesses a volatile European session so far this Friday, now extending yesterday’s drop amid notable US dollar demand across the board.

GBP/USD: Focus on US Q2 GDP

The spot failed several attempts to build on the recovery above the 1.31 handle and fell back into the red zone, as the US dollar hit fresh five-day highs against its six major peers on expectations that the US Q2 GDP report will show robust readings, confirming that the recent improvement in the US economy. The US economy is expected to have grown at a 4.1% y/y in the second quarter of 2018, following 2.0% in the first quarter.

On the GBP-side of the equation, looming Brexit uncertainty continues to keep the bulls at the bay, especially after the European Union (EU) Chief Brexit Negotiator Michel Barnier rejected the UK’s latest proposal for post-Brexit trade plan. However, the downside may remain capped amid increased expectations that the Bank of England (BOE) may hike interest rates next week.

In the meantime, the focus remains on the USD dynamics and US macro news for near-term trading impetus.

 GBP/USD Technical Levels

Haresh Menghani, Analyst at FXStreet noted: “From a technical perspective, weakness below the 1.3100 handle could get extended towards weekly lows support near the 1.3070 region. A follow-through weakness might prompt some additional technical selling and turn the pair vulnerable to accelerate the fall further towards challenging the key 1.3000 psychological mark.   On the flip side, any meaningful up-move now seems to confront fresh supply near the 1.3140-45 zone, above which the pair is likely to make a fresh attempt towards conquering the 1.3200 handle.”