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  • Persistent Brexit-related uncertainties continue to weigh on the British Pound.
  • A modest USD pullback from two-week tops helped rebound from daily lows.
  • Traders seemed rather unimpressed by Friday’s mixed US macroeconomic data.

The GBP/USD pair managed to recover a major part of its early lost ground, albeit struggled to extend the momentum and remained below session tops post-US macro data.
 
Persistent Brexit-related uncertainties continued weighing on the British Pound through the European trading session on Friday and forced the pair to extend its recent sharp pullback from two-month tops, set on September 20. The downward trajectory dragged the pair to near three-week lows, through bulls managed to find some respite near the 1.2270 region – a support marked by 50% Fibo. level of the 1.1959-1.2582 recent strong recovery move.

Mixed US data does little to influence

The intraday bounce of around 40-50 pips lacked any obvious fundamental catalyst and was solely led by a modest US Dollar pullback from the 99.00 neighbourhood or two-week tops. Meanwhile, Friday’s mixed US economic releases did little to influence the USD price dynamics and produce any meaningful trading opportunities around the major.
 
Data released on Friday showed that durable goods unexpectedly recorded a modest growth of 0.2% in August as compared to consensus estimates for a 1.0% decline. Adding to the upbeat headline print, core durable goods, which exclude transportation items, rebounded sharply during the reported month and rose more-than-expected, by 0.5% vs 0.2% anticipated.
 
The positive readings, to a larger extent, were negated by weaker non-defense capital goods orders excluding aircraft and parts, seen as a proxy for business investment, which unexpectedly contracted by 0.2% as against a flat reading expected and the previous month’s downwardly revised reading of +0.2% (0.4% reported earlier).
 
Other data showed that the US personal spending decelerated sharply to 0.1% rate in August despite a goodish pickup in personal income, which rose 0.4% during the reported month as compared to 0.1% previous. Meanwhile, the core PCE price index – the Fed preferred inflation gauge – matched consensus estimates and ticked higher to 1.8% yearly rate in August, through failed to inspire traders.
 
With Friday’s US macro data out of the way, the focus now shifts back to any fresh incoming Brexit-related headlines coming out of a meeting between the Brexit Secretary Steve Barclay and the EU’s chief Brexit negotiator Michel Barnier, which might continue to play a key role in driving sentiment surrounding the Sterling.

Technical levels to watch