- Extremely oversold conditions helped GBP/USD to gain some traction on Friday.
- Mixed UK macro data failed to impress bulls or provide any meaningful impetus.
- Persistent Brexit uncertainties should keep a lid on the attempted recovery move.
The GBP/USD pair held on to its modest gains around the 1.2825 region and had a rather muted reaction to the UK macro data dump.
The pair managed to gain some positive traction on the last trading day of the week and recovered a part of the previous day’s steep decline of over 250 pips. It is worth recalling that the GBP/USD pair on Thursday witnessed a dramatic turnaround from the 1.3035 region and nosedived to sub-1.2800 levels, or seven-week lows.
The EU threatened to pursue legal action against the UK over breach of the Brexit withdrawal treaty if it doesn’t drop the so-called Internal Market Bill. This comes on the back of the deadlock in Brexit talks, which, in turn, was seen as one of the key factors that continued weighing heavily on the British pound.
However, extremely oversold conditions on intraday charts extended some support and assisted the GBP/USD pair to rebound from the 1.2775-70 area. The pair maintained its positive tone above the 1.2800 mark, albeit lacked any strong follow-through following the release of softer-than-expected UK monthly GDP print.
The ONS reported this Friday that the UK economy recorded a growth of 6.6% in July as against 6.7% expected and 8.7% in June. The slight disappointment was largely offset by stronger Manufacturing and Industrial production data. Nevertheless, the figures reaffirmed a continued rebound in the economy amid the further reopening of the economy and extended some support to the sterling.
Meanwhile, the pair’s inability to capitalize on the move clearly suggests that the recent bearish pressure might still be far from being over. Hence, any subsequent move up might still be seen as a selling opportunity.
Later during the early North American session, the release of the latest US consumer inflation figures will influence the USD price dynamics. The data, along with any incoming Brexit-related headlines, should assist traders to grab some meaningful trading opportunities on the last day of the week.
Technical levels to watch
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