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GBP/USD recovers above 1.34 after EU's Oettinger's comments

  • GBP/USD fell to a fresh 10-day low on Thursday.
  • EU's Oettinger says they are making progress in Brexit talks.
  • DXY sticks to daily gains above mid-93s.

After dropping to its lowest level since November 28 at 1.3320, the GBP/USD pair gained traction in the second half of the day and turned positive above the 1.34 mark. As of writing, the pair was trading at 1.3413, gaining 0.15% on the day.

Brexit headlines drive the price action

Since the beginning of the week, the GBP struggled to find demand as various developments surrounding the Brexit negotiations suggested that the UK and the EU were unlikely to reach a deal before the EU summit next week. However, earlier in the NA session, European Union's Budget Commissioner Günther Oettinger said that there was noticeable progress on Brexit divorce bill, adding that they were only a few billion euros apart on the financial settlement. Following these comments, the GBP/USD pair recorded a 50 pip jump and is now looking to close the day with gains following three straight negative closings.

On the other hand, the US Dollar Index, which rose to a two-week top at 93.78 earlier in the day, went into a consolidation phase amid a lack of fresh catalysts that could impact the price action. Moreover, ahead of tomorrow's critical NFP report, investors seem to be staying on the sidelines. At the moment, the index is at 93.67, up 0.15% on the day.

In her NFP preview, Valeria Bednarik, American Chief Analyst at FXStreet, wrote, "if the numbers surprise to the upside, they would surely back current Dollar's strength, but no fireworks should be expected, precisely because of the Fed and the ECB´s policy meetings next week."

Technical outlook

The pair faces the immediate support at 1.3320 (daily low) ahead of 1.3250 (50-DMA) and 1.32 (100-DMA/psychological level). On the flip side, resistances could be seen at 1.3475 (Dec. 5 high), 1.3540 (Dec. 4 high) and 1.3600 (psychological level).