GBP/USD clings to daily gains above 1.31 following Brexit Secretary Raab's comments

British Brexit Secretary Raab says they had a good Brexit meeting in the cabinet.
US Dollar Index recovers modestly above 94, looks to close the day in red.

Eren Sengezer FXStreet

The GBP/USD pair advanced to a daily high of 1.3165 during the early trading hours of the NA session and went into a consolidation phase in the last hours. Although the pair retraced a portion of its daily gains, it still looks to close the day in the positive territory. At the moment, the pair is up 0.42% on the day at 1.3125.

Following the weekend reports suggesting that the opposition Labour Party would push for a snap election and a second referendum, British Brexit Secretary Raab dismissed these rumours and reassured markets that there wouldn't be a second referendum. Commenting on the EU's stance, Raab stated that they shouldn't overreact to "any blip in the road by the EU." Later in the day, Raab, once again, crossed the wires as he briefed the press following the cabinet meeting and note that they had a healthy discussion and that they would continue to seek a negotiated deal.

Earlier in the session, a sharp upsurge witnessed in the EUR/GBP pair on the back of some hawkish remarks from the ECB President Mario Draghi seems to be the primary reason why the GBP/USD pair lost its bullish momentum.

Today's data from the United States showed that the Chicago Fed National Activity Index stayed unchanged at 0.18 in August while the Dallas Fed Manufacturing Index retreated to 28.1 in September from 30.9 in August. The US Dollar Index, which met a resistance near mid-94s during the European trading hours, now looks to close the day modestly lower. At the moment, the index is down 0.15% on the day at 94.08.

Technical levels to consider

The pair could encounter the first support at 1.3090 (100-DMA) ahead of 1.3030 (20-DMA) and 1.2950 (50-DMA). On the upside, resistances align at 1.3165 (daily high), 1.3200 (psychological level) and 1.3275 (Sep. 21 high).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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