- US Dollar drops modestly, favoring a rebound in GBP/USD from near 1.2900.
- Price action remains limited despite Brexit headlines and ahead of a busy week.
The GBP/USD has been moving in the range 1.2900 and 1.2950 since Friday’s American session. Cable consolidates after making a modest bounce from the multi-month low it reached on Wednesday at 1.2864. Recently dropped toward 1.2900 following the release of US data and as of writing is hovering around 1.2930/35, marginally higher from the level it closed yesterday.
The US Dollar was modestly lower across the board. The personal income and spending report offered mixed signals having no impact. The economic calendar shows a busy week ahead in US, with the FOMC statement on Wednesday and the non-farm payroll report on Friday.
In the UK, the key event might be the Bank of England meeting. “We expect the Bank of England to keep the door ajar to further tightening on Thursday, and there’s a chance that one or two committee members vote for a rate hike this week. In reality though, we think the chances of rate hike this year have receded, with growth set to remain capped by ongoing Brexit uncertainty,” wrote ING analysts.
The Brexit drama continues to be an important driver. The latest headline was a report from The Guardian signaling that Labour talks with May’s government were more positive than expected from last week’s discussions. So far it had no influence on Pound’s crosses.
Despite the news flow, GBP/USD kept moving in a small range. Last week, after a quiet Monday, volatility started to recover during Tuesday’s American session. If the pair remains steady, the economic events and numbers will likely move the pair over the next days. If it resumes the decline, the Pound could easily reached fresh 2-month lows versus the US Dollar.
Levels to watch
To the upside, the immediate resistance is seen around 1.2950, followed by 1.2975 and 1.3000 (Apr 19 high). On the flip side, support could be located at 1.2900/05 (Apr 29 low), 1.2865 (last week low) and 1.2850.
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