GBP/USD saw a sharp drop from Tuesday European morning highs above 1.3400, amid continued Brexit deadlock. The pair has rebounded back to around 1.3350 in recent trade and still trades higher against the broadly weaker USD. GBP/USD has slipped substantially from European morning session highs above 1.3400, but still trades in the green, with the pair up roughly 30 pips or 0.2% on the day. Sterling still waiting for a Brexit breakthrough As many analysts/market commentators have argued in recent days, it appears that in the absence of either 1) a Brexit breakthrough (i.e. news of a compromise reached on one of the key sticking points) or 2) a decent extension of US dollar weakness (perhaps enough to see the Dollar Index move below 91.50 and towards 91.00), GBP/USD will find it hard to break above the 1.3400 mark. Indeed, this was certainly the case this morning; there is still no evidence that the UK and EU are any closer to agreement on the key sticking points of fisheries, state aid and level playing field, thus when GBP/USD sharply corrected lower from 1.3406 highs set during the Tuesday European morning session (highest levels since September), hitting lows by midday UK time in the 1.3320s. The pair has now managed to recover back to the 1.3350 mark as the US dollar has weakened back towards lows of the day in the 91.60s. UK data was broadly ignored by a market seemingly much more focused on Brexit and USD dynamics; UK nationwide house price index number for November were stronger than expected, with the MoM rate of price growth coming in at 0.9% (exp. 0.3%) and the YoY rate of price growth coming in at 6.5% (exp. 5.5%). Meanwhile, November manufacturing PMI was revised higher from the preliminary estimate of 55.2 to 55.6. USD flows could take centre stage; PMI data and Fed Chair Powell incoming While Brexit sentiment has apparently been the dominant force in driving GBP/USD this week, USD dynamics could be set to take over with the release of ISM manufacturing PMI data at 15:00GMT, as well as a speech by Fed Chair Powell to the Senate Banking Committee at the same time. On the data; markets looks for the headline number to drop to 57.9 in November from October’s lofty 59.3. As ever, the subindices (such as Employment, New Orders, Prices Paid) will also be closely watched. Indeed, new orders (the most “forward-looking aspect of the report) hit 67.9 last month, its highest level since January 2004, boding well for US manufacturing over the coming months. Wells Fargo note that the pandemic has seen consumers shift their spending from services (i.e. experiences that have been shut down) towards physical goods, which has supported the global manufacturing rebound. Moreover, “with multiple effective vaccines on the horizon, we will be looking for signs of a business investment acceleration in the U.S. manufacturing data”, says the bank. Meanwhile, the text for Powell’s speech to the banking committee has already been released (on Monday); In it, he reiterated that the outlook for the economy is uncertain and hinges on the path of pandemic and whilst the economic recovery continues, the pace of the recovery, including in the labour market, has moderated. Moreover, he reiterated that while recent vaccine news is good, the recent rise in Covid-19 cases is concerning and could prove challenging in the months ahead. Thus, Powell reiterated that the Fed remains committed to using its full range of tools to support the economy moving forward. There will be a Q&A, however, which could give the Fed Chair chance to offer more information on the outlook for policy. Markets are looking for indications that the Fed might increase accommodation at its December meeting. Soft data would feed into this narrative, as would any hints from Powell, and could spur USD weakness. GBP/USD continues to trade within recent ranges GBP/USD continues to trade within the same 1.3300ish-1.3400ish range that has been dominant since the beginning of last week. A break above recent 1.3400ish highs will open the door to a move higher towards August highs of just under 1.3500, and potentially to above the big figure and to a test of December 2019’s post-UK general election highs just under 1.3520. Conversely, a break below support in the 1.3290-1.3310ish region will open up the door to a move lower towards last Monday’s lows in the 1.3260s and perhaps even the 21-day moving average in the 1.3220s. FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next Breaking: ISM Manufacturing PMI retreats to 57.5, EUR/USD touches 1.2000 FX Street 2 years GBP/USD saw a sharp drop from Tuesday European morning highs above 1.3400, amid continued Brexit deadlock. The pair has rebounded back to around 1.3350 in recent trade and still trades higher against the broadly weaker USD. GBP/USD has slipped substantially from European morning session highs above 1.3400, but still trades in the green, with the pair up roughly 30 pips or 0.2% on the day. Sterling still waiting for a Brexit breakthrough As many analysts/market commentators have argued in recent days, it appears that in the absence of either 1) a Brexit breakthrough (i.e. news of a compromise reached on… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.