The GBP/USD pair continued with its good way price action on Thursday and remained at the mercy of incoming Brexit headlines/developments. The pair initially dipped to the 1.2700 handle amid a fresh wave of global risk-aversion trade, which underpinned the US Dollar's relative safe-haven status. However, an inversion of the short end of the US Treasury yield curve, pointing to an impending recession in the world's largest economy, kept a lid on any strong follow-through USD buying and assisted the pair to rebound swiftly from daily lows amid absent negative Brexit headlines.
The intraday positive move got an additional boost following the disappointing release of the US private sector employment details - ADP report and rumours that the UK Cabinet discussed the possibility of a second referendum or a softer Brexit if May's plan doesn't pass through the Parliament. The attempted rebound, however, lacked any strong conviction as investors still seemed reluctant to place any aggressive bets ahead of the crucial Parliamentary vote on the UK PM Theresa May’s negotiated deal on Dec. 11th.
The pair traded with a mild negative bias through the Asian session on Friday and retreated further below the 1.2800 handle. Market participants now look forward to the keenly watched US monthly jobs report, popularly known as NFP, for some meaningful trading opportunities on the last trading day of the week. Developments surrounding the UK’s looming departure from the EU will remain the next big catalyst for the pair's firm near-term direction and hence, any immediate reaction to the US macro data seems more likely to be limited within a familiar trading range.
Looking at the technical picture, the pair continued with its struggled to find acceptance above a short-term descending trend-line, extending from Nov. 23 daily swing high. The mentioned trend-line, currently near the 1.2800 handle might continue to act as an immediate strong barrier, which if conquered decisively might prompt some near-term short-covering move and assist the pair to head back towards challenging the 1.2880-85 supply zone, with some intermediate resistance near the 1.2840-45 region.
On the flip side, immediate support is now pegged near the 1.2750 area and is followed by the very important 1.2700 round figure mark, which if broken is likely to accelerate the slide back towards yearly lows, around the 1.2660 region.
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