GBP/USD returns to mid-1.30s as greenback gains traction in the last hour

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  • EU says there was no breakthrough in Brexit talks in Brussels.
  • US 10-year T-bond yield gains more than 1% to support the USD.
  • Despite uninspiring data releases from the U.S. DXY posts modest gains.

The GBP/USD pair rose toward the 1.31 mark in the early NA session but failed to push higher as Brexit headlines weighed on the GBP and the greenback gathered some strength on the back of surging T-bond yields. At the moment, the pair is trading at 1.3056, adding 0.06% on a daily basis.

Earlier today, a UK official was quoted saying that getting a Brexit deal by next week was unlikely. Later in the day, citing an EU official, Bloomberg reported that this week’s talks in Brussels didn’t lead to a breakthrough to further hurt the expectation of the UK and EU moving closer to a deal.

On the other hand, today’s data from the U.S. showed that durable goods orders in December rose less than expected in December and weekly jobless claims fell more than anticipated in the week ending February 16. Other data revealed that the service sector expanded at a strong pace in February but the manufacturing sector lost momentum with the Markit PMI data easing to 53.7 to miss the analysts’ estimate of 54.7.

Despite the uninspiring data, however, a more-than-1% increase seen in the 10-year T-bond yield provided a boost to the US Dollar Index, which was last up 0.1% on the day at 96.60.

Today’s data releases from the U.S.

  • US: Durable goods orders rose 1.2% in December vs 1.5% expected.
  • US: Initial weekly jobless claims decreased by 23,000 to 216,000.
  • Philly Fed Manufacturing Index plummets to -4.1 in February from 17 in January.
  • US: Markit Manufacturing PMI drops to 53.7 in February (preliminary) vs 54.7 expected.
  • US: Existing home sales drop 1.2% in January.

Technical levels

The pair could face the initial support at 1.3000 (psychological level) ahead of 1.2970 (20-DMA) and 1.2940 (200-DMA). On the upside, resistances align at 1.3100/1.3095 (Feb. 20 high/daily high), 1.3160 (Jan. 31 high) and 1.3210 (Jan. 28 high).

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