GBP/USD rises further toward 1.2900 after US data
|- Dollar drops further after US data, ahead of FOMC decision.
- Cable holds to gains, Pound steady as UK heads for snap elections.
The GBP/USD pair rose further and spiked to 1.2897, reaching the highest level since Thursday and then pulled back modestly. As of writing trades at 1.2885, up 30 pips for the day.
The last leg higher in Cable was driven by a decline of the US Dollar across the board. The Greenback weakened following the release of US Consumer Confidence data. The Index tracked by the Conference Board fell to 125.9 in October, below expectations. The S&P/Case-Shiller Index showed home prices rose 2.0% in August from a year ago, also below consensus.
Attention now turns to the FOMC meeting. The Federal Reserve will announce tomorrow its decision on rates. A 25 bps is widely expected. The projections, the forward guidance and Powell’s words will likely have an impact on financial markets.
In the UK, a no-deal Brexit in October is off the table, so opposition Labour Party's leader, Jeremy Corbyn, announced they will be supporting a snap election in December. Recently the House of Commons voted in favour of the Creasy amendment that allows the election motion to be amended. The Ponund rose immediately after Corbyn’s support to elections but it quickly lost momentum as uncertainty still remains the main scenario.
Technical outlook
The GBP/USD pair is holding so far firm above 1.2870, a relevant short-term resistance that capped the upside on Friday and yesterday. As long as it remains on top, the outlook would point to the upside.
The next strong resistance is 1.2900; a break higher could open the doors to more gains targeting 1.2920. On the flip side, a slide back below 1.2860 would sign weakness ahead. Support level below might lie at 1.2830 and 1.2805 (Oct 25 & 29 low).
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