“¢ Disappointing Empire State manufacturing index adds to the USD weakness.
“¢ A strong upsurge in the US bond yields does little to ease the USD bearish pressure.
“¢ GBP further supported by some positive Brexit comments by Barnier and EU council.
The GBP/USD pair continued scaling higher through the mid-European session and built on its positive momentum further beyond the 1.3100 handle.
After Friday’s brief pause, the pair regained positive traction at the start of a new trading week and has now moved back within striking distance of six-week tops, around the 1.3135 region.
The prevalent broad-based US Dollar weakness, amid escalating trade tensions between the world’s two largest economies, was seen as one of the key factors behind the pair’s positive momentum for the fifth session in the previous six.
The USD selling remained unabated following the release of disappointing Empire State manufacturing index, coming in at 19 points for September as compared to 25.6 previous and 23.0 anticipated.
Even a strong upsurge in the US Treasury bond yields, with the yield on the benchmark 10-year bond rising to the highest level in four months, did little to ease the USD bearish pressure and hinder the pair’s positive momentum.
The British Pound was further supported by some positive Brexit headline, wherein the EU’s chief negotiator Michel Barnier was noted saying that talks are continuing in the spirit of good cooperation.
The latest leg of uptick over the past hour or so could also be attributed to comments by the European Council, saying that some parts of the draft agreement have already been agreed by Barnier and Raab.
Technical levels to watch
A follow-through buying has the potential to continue lifting the pair further towards 100-day SMA hurdle near the 1.3175-80 region en-route the 1.3200 handle. On the flip side, any meaningful retracement back below the 1.3100 handle might continue to find some support near the 1.3165-60 region, which if broken might turn the pair vulnerable to slide back towards testing the key 1.30 psychological mark.
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