GBP/USD sideways around 1.2950, holds onto weekly gains

• GBP/USD flat on Friday, consolidating weekly gains under 1.3000.
• Pound outperforms and recovers half of last week’s losses versus US dollar.

The GBP/USD printed a fresh daily low at 1.2931 after the beginning of the American session and quickly bounced back above 1.2950. On Friday, it is moving sideways, below 1.3000, consolidating strong weekly gains.

The pound rose across the board over the last five days, recovering after falling sharply during the previous week. GBP/USD bottomed back on September 11 at 1.2761, the lowest since late July. Since then, it rose more than two hundred pips.

The recovery was supported by some modest change in Prime Minister Johnson position toward the Internal Market bill, agreeing to give Parliament a veto on some part of the bill. Also, the European Commission President mentioned she still thinks a deal is possible.

The Bank of England’s dovish message, hinting at the possibility of negative interest rates only weakened the pound for a few hours. GBP/USD pulled back to 1.2860 and rebounded.

Next week economic releases include as most important the PMIs. Attention will likely focus on Brexit developments and speeches from FOMC members. “As recent volatility has shown, sterling is becoming more sensitive to what happens after the Brexit transition period expires at year-end. Parliament is set to approve the Internal Markets Bill during the week, and markets will focus on the EU’s response. If talks collapse, the pound would tumble, while attempts to reach a compromise would boost it”, explained Yohay Elam, analysts at FXStreet.

Technical levels