The GBP/USD pair bounced-off session lows of 1.2718 and swung back higher to test Monday’s high of 1.2759, only to find sellers lurking near the last to drift lower, despite aggressive selling seen in the US dollar against its main competitors. Meanwhile, the USD index slumps almost -0.50%, flirting with fresh two-week lows of 96.62.
The spot regained upside momentum last hour, as the offered tone behind the greenback picked-up pace across the board, after the EUR/USD pair surged to fresh multi-day tops beyond 1.1210/20 levels, in response to upbeat comments delivered by the ECB President Draghi at the central banking forum in Portugal.
However, the renewed uptick appears to lack follow-through, as fresh Brexit jitters combined with waning UK consumer confidence post-May’s election debacle continue to undermine the British currency.
Markets now remain focused on the BOE’s Financial Stability Report (FSR) and Carney’s speech due out in less than an hour for fresh impetus on the pound. Meanwhile, the UK CBI realized sales, US CB consumer confidence data and Fed Chair Yellen’s speech will speeches garner a lot of attention in the US session ahead.
GBP/USD levels to consider
Slobodan Drvenica at Windsor Brokers Ltd. offers key technical levels for the spot: “Monday's action showed strong upside rejection at 1.2759, as pound failed to capitalize from Tory/DUP deal in forming Conservatives' minority government and repeatedly closed below the first upper pivot at 1.2737 (Fibo 38.2% of 1.2977/1.2588 downleg).”
“Close above the latter is seen as minimum requirement for continuation of bull-leg from 1.2588 (21 June low) towards barriers at 1.2759 (Monday's high); 1.2784 (falling 20SMA) and 1.2811/17 (daily Tenkan-sen/14-19 June lower platform). Bearishly aligned daily studies keep in play risk of fresh weakness, seen on sustained break below 1.2700 pivot,” Slobodan adds.
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