On Thursday, the British Pound was earlier pressured by a slow progress over the Brexit negotiations, with both the UK and the EU remaining far from discussing a future trading relationship. However, the strong US Dollar bullish move seen over the past two-days ran out of steam during NA session, helping the GBP/USD pair to rebound sharply from weekly lows near mid-1.2800s. The main driver behind the greenback's pullback was the US data that showed inflation remains stubbornly below the Fed's 2% target. Adding to this, the US Treasury Secretary Steven Mnuchin's comments that a weaker buck may be good for trade further collaborated to the buck's overnight weakness.
The pair now seems to have entered a consolidation phase, just below mid-1.2900s as traders now look forward to the release of UK Markit manufacturing PMI, which is expected to come-in at 55.0 for August as compared to previous month's reading of 55.1. The key focus, however, would remain on the keenly watched US monthly jobs report, due for release later during the NA session. Today's NFP print could have implications on the Fed's near-term monetary policy outlook and hence, should act as a big catalyst for the greenback's next leg of directional move.
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Technically, the pair has held in neutral territory but traders seemed looking for reasons to keep pushing it higher. Any big divergence from today's UK manufacturing PMI and (or) the US employment details would provide the required momentum for a decisive break in either direction.
Bulls would be eyeing for a sustained move beyond 50-day SMA hurdle near the 1.2965-70 region, above which the pair seems set to surpass the key 1.30 psychological mark and head towards testing its next horizontal resistance near 1.3030-35 area.
On the flip side, weakness back below the 1.2900 handle, leading to a subsequent drop below mid-1.2800s, now seems limited and is more likely to find some strong buying interest near a short-term ascending trend-line support near the 1.2810-1.2800s region. Only a decisive break below the trend-line support would turn the pair vulnerable to slide further in the near-term.
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