GBP/USD breaches 1.2900 on poor UK data

The offered bias is now picking up pace around the Sterling and is forcing GBP/USD to revert initial gains and re-focus on the downside.

GBP/USD challenges the 100-day SMA

The British Pound came under extra selling pressure following another disappointing results from the UK docket.

In fact, Industrial Production contracted at a monthly 0.5% and Manufacturing Production dropped 0.7% inter-month in December, all prints coming in below expectations.

Additionally, advanced figures showed Business Investment are expected to contract 1.4% QoQ in the fourth quarter, while the trade deficit came in at £12.1 billion a tad below consensus.

On the more relevant release, preliminary GDP figures noted the economy is expected to have expanded 0.2% QoQ during the October-December period and 1.3% from a year earlier, all prints missing forecasts.

Back to the usual Brexit scenario, Brexit Secretary S.Barclay and his EU peer M.Barnier are expected to resume talks later in the day in Strasbourg.

What to look for around GBP

The British Pound is expected to remain under increasing pressure as we get closer to the March 29 deadline and there is still not a hint of a solution to the EU-UK divorce, where the Irish backstop stays in centre stage and a ‘hard Brexit’ scenario is not totally ruled out. Extra weakness around GBP is also coming from the recent BoE event, where the central bank cut its growth forecasts, while investors remain highly skeptical on a probable rate hike by the ‘Old Lady’ in the next months.

GBP/USD levels to consider

As of writing, the pair is retreating 0.29% at 1.2898 facing the next down barrier at 1.2854 (low Feb.7) seconded by 1.2809 (55-day SMA) and finally 1.2668 (low Jan.15). On the upside, a break above 1.2992 (21-day SMA) will open the door to 1.3000 (high Jan.17) and then 1.3025 (200-day SMA).