- The USD weakens following the release of the dismal regional manufacturing index.
- Persistent Brexit uncertainties might keep a lid on any strong follow-through up-move.
The GBP/USD pair spiked to fresh session tops, with bulls looking to build on the recovery momentum further beyond the 1.2600 handle post-US data.
The US Dollar failed to capitalize on Friday’s goodish bound and remained depressed on the first day of a new trading week, rather lost some ground following the release of weaker Empire State Manufacturing Index. In fact, the index dropped to -8.6 for June – marking its first contraction since May 2017 and the lowest reading since October 2016.
The data triggered a sharp intraday pullback in the US Treasury bond yields, which dragged the greenback farther from a two-week high set on Monday and turned out to be one of the key factors providing a minor lift to the major, albeit persistent Brexit uncertainties kept a lid on any further up-move.
Given that hardline Brexiteer Boris Johnson remains a leading candidate to be Britain’s next Prime Minister, sentiment surrounding the British Pound remains fragile amid fears of a no-deal Brexit. Hence, it would be prudent to wait for a strong follow-through buying before confirming that the pair might have actually bottomed out in the near-term or positioning for any further near-term recovery.
Technical levels to watch
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