GBP/USD drops to 1.2800 neighborhood, 1-1/2 week lows post-UK PMI
| • Renewed Brexit jitters/disappointing UK data continue to weigh on the British Pound.
• Resurgent USD demand aggravates the selling pressure ahead of BoE’s inflation report hearings.
The GBP/USD pair kept losing ground for the fourth consecutive session and dropped to the 1.2800 neighbourhood, 1-1/2 week low post-UK PMI.
After a brief Asian session consolidation phase, the pair met with some fresh supply and remained under some heavy selling pressure through the early European session. Fresh Brexit jitters, especially after the EU chief Brexit negotiator Michel Barnier's comments over the weekend, kept denting sentiment surrounding the British Pound.
Making it even worse for the Sterling was today's disappointing release of UK construction PMI, coming in at 52.9 for August. The reading was well below consensus estimates for a reading of 55 and worse than 55.8 previous, which added yesterday's dismal UK manufacturing PMI and kept exerting downward pressure.
Adding to this, resurgent US Dollar demand, supported by a goodish pickup in the US Treasury bond yields and growing global trade tensions, further collaborated towards aggravating the selling pressure surrounding the major.
Moving ahead, investors now look forward to the BoE Inflation Report hearing, where Governor Mark Carney's comments on the economy and interest rate might infuse a fresh bout of volatility across the GBP crosses.
Technical levels to watch
On a sustained break below the 1.2800 handle, the pair is likely to accelerate the downfall towards 1.2765 intermediate support en-route the 1.2710-1.2700 region. On the flip side, any meaningful recovery move might now confront fresh supply near the 1.2850-55 region, above which the pair could make an attempt to reclaim the 1.2900 handle.
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