GBP/USD unable to recover from monthly lows, drops back to the 1.2700 area

• Pound consolidates weekly losses versus the US dollar.
• DXY prints fresh monthly highs, remains strong even as Wall Street rebounds.

The GBP/USD printed a fresh two day low at 1.2686 during the American session. As of writing, it is trading at 1.2700/05, down 50 pips for the day and 210 pips from the level it had a week ago. The pound remained above the weekly low it reached on Wednesday at 1.2674.

The decline took place amid a stronger US dollar across the board. The DXY climbed above 94.70, hitting the highest since July. The greenback holds onto daily gains despite the recovery in Wall Street and even as US yields decline. The Dow Jones is now up, rising 100 points while the Nasdaq gains more than 1%.

Economic data from the US came in mixed with the Durable Goods Orders report having no impact. In the UK, PM Johnson warned that more restrictions could be imposed if necessary amid the pandemic.

Regarding Brexit, the European Union told the United Kingdom that it must accept some critical demands next week if they want to make progress before the October deadline, Bloomberg reported.

A -200 pips week for GBP/USD

On a weekly basis, cable is about to post the lowest close since July, and it could be first since June below the 20-week moving average. The pound resumed the downside versus the US dollar, triggered in this case by a rally of the greenback.

On the downside, the next support is seen at 1.2650/60; a break lower would point to more losses ahead, probably toward the 1.2500 zone. On the upside, the immediate resistance is located at 1.2770 and above the critical 1.2990/1.3000 (horizontal level and the 20-day moving average).

More levels