Currently, GBP/USD is trading at 1.2324, down -0.69% on the day, having posted a daily high at 1.2413 and low at 1.2281.
GBP/USD is on the back foot on Brexit concerns and a resurgence of the dollar. In respect of UK data, we got a stronger-than-expected Feb House price data from the “Nationwide” lender (+0.6%), on expectations consumer credit data for Jan (+GBP1.4bn) but weaker than expected Feb manufacturing PMI (54.6 versus 55.8 expected and 55.7 in Dec), as explained by analysts at Scotiabank, adding:
"Uninspiring data and broader strength in the USD leave the UK a relative under-performer on the day. We think Brexit risks and uncertainties remain a potential drag on the GBP and expect Cable to retest the 1.20 area in the next few weeks as the process moves towards a formal exit from the EU". Meanwhile, the US dollar is firm on the back of Fed Dudley's recent remarks that March is a likely timeslot for a Fed hike and the market has priced it in.
The analysts at Scotiabank explained that GBP/USD short-term technicals are bearish and how Cable has dropped out of the low end of the Feb consolidation range. "After trading consistently between 1.2385/1.2580 through last month, weakness implies immediate risk to the 1.2180/85 area", they think. Meanwhile, the outlook is technically bearish below the 4hr 20 and 50 smas clustered below 1.2480.
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