The GBP/USD pair had good two-way moves on Thursday and continues to be influenced by the incoming Brexit headlines. The pair got a minor boost and spiked to an intraday high level of 1.2911 on news that the EU member states are willing to consider a Brexit deal, which will allow Britain to remain in the single market for goods while opting out of the free movement of people. The uptick, however, turned out to be short-lived and met with some fresh supply as investors believed that any such deal is likely to get rejected in the UK Parliament as it will limit the country's ability to strike a new free trade deal.
Adding to this, resurgent US Dollar demand, further boosted by Chicago Fed President Charles Evans' hawkish comments, reaffirming prospects for gradual Fed rate hikes through the end of 2018, exerted some additional downward pressure. The selling bias remained unabated through the Asian session on Friday and was being weighed down by a strong follow-through USD buying interest, primarily led by the EUR/USD pair's bearish breakdown to over one-year lows.
Currently struggling to hold above the 1.2800 handle, market participants now look forward to a packed economic docket for a fresh bout of volatility on the last trading day of the week. From the UK, the prelim Q2 GDP growth figures, along with manufacturing/industrial production figures for June and the newly introduced monthly GDP estimate for June will be looked upon for some immediate respite for the GBP bulls.
Any immediate reaction to positive UK economic data might turn out to be short-lived and is likely to remain capped amid growing prospects for a no-deal Brexit. Moreover, the US consumer inflation figures, due for release later during the early North-American session, seems unlikely to hinder the ongoing USD bullish momentum and thus, increases the pair's vulnerability to continue with its well-established bearish trend.
Looking at the technical picture, the pair on Thursday confirmed a fresh bearish breakdown below a short-term descending trend-channel and hence, seems more likely to extend the downward trajectory towards testing August 2017 lows, around the 1.2775-70 region. A follow-through selling has the potential to continue dragging the pair further towards testing sub-1.2700 level in the near-term.
On the flip side, any recovery attempts might now confront fresh supply near the trend-channel support break-point, now turned resistance, around the 1.2840-50 region. Any subsequent up-move beyond the mentioned barrier seems more likely to remain capped at the 1.2900 handle.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD bounces to 0.6450, shrugs off mixed Australian jobs data
AUD/USD is rebounding to test 0.6450 amid renewed US Dollar weakness in the Asian session on Thursday. The pair reverses mixed Australian employment data-led minor losses, as risk sentiment recovers.
USD/JPY bounces back toward 154.50 amid risk-recovery
USD/JPY bounces back toward 154.50 in Asian trading on Thursday, having tested 154.00 on the latest US Dollar pullback and Japan's FX intervention risks. A recovery in risk appetite is aiding the rebound in the pair.
Gold rebounds on market caution, aims to reach $2,400
Gold price recovers its recent losses, trading around $2,370 per troy ounce during the Asian session on Thursday. The safe-haven yellow metal gains ground as traders exercise caution amidst heightened geopolitical tensions in the Middle East.
Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets
Manta Network price was not spared from the broader market crash instigated by a weakness in the Bitcoin market. While analysts call a bottoming out in the BTC price, the Web3 modular ecosystem token could suffer further impact.
Investors hunkering down
Amidst a relentless cautionary deluge of commentary from global financial leaders gathered at the International Monetary Fund and World Bank Spring meetings in Washington, investors appear to be taking a hiatus after witnessing significant market movements in recent weeks.