GBP/USD fails to preserve gains, calms down below mid-1.27s

GBP/USD trades in a wide 130 pip range on Monday.
Brexit uncertainty doesn't allow a deep recovery in GBP.
US Dollar Index moves sideways near 97 following mixed PMI data.

Eren Sengezer FXStreet

Although the GBP/USD pair took advantage of the broad-based USD weakness and rose above the 1.28 handle on Monday, it failed to extend its rally in the second half of the day and erased its daily upside. As of writing, the pair was trading at 1.2735, losing 0.1% on a daily basis.

After the U.S. and China agreed to hold off on additional tariffs for the next 90 days, the greenback, which acted as a safe-haven during the times when trade-concerns weighed on the sentiment, started the week under pressure to allow the pair to gain traction. Additionally, the IHS Markit's Manufacturing PMI in the UK came in at 53.1 in November to beat the analysts' estimate of 51.8 and provided extra support to the sterling.

UK manufacturing PMI hits 2-month highs at 53.1 in Nov, a big beat.

However, with political headlines from the UK hinting at the possibility of the Parliament voting down Prime Minister Theresa May's Brexit deal, investors refrained from making large bets and the pair lost its momentum.

One third of May’s MP Trade Envoys will not back Brexit plan – Sky.

On the other hand, the US Dollar Index rose toward the 97 mark in the NA session and forced the pair to fall back into the negative territory. Nevertheless, today's mixed manufacturing PMI data from the U.S. made it difficult for the index to stay in the green and helped the pair to limit its losses.

US: Markit Manufacturing PMI falls to 55.3 vs 55.4 expected.
US: ISM Manufacturing PMI rises to 59.3 vs 57.5 expected.

Technical levels to consider

1.2700 (daily low/Oct. 30 low) aligns as the first critical support for the pair ahead of 1.2640 (Jun. 12, 2017, low) and 1.2590 (Jun. 21, 2017, low). On the upside, resistances are located at 1.2820 (20-DMA/daily high), 1.2880 (Nov. 23 high) and 1.2930 (Nov. 22 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.

EUR/USD pops to yearly highs near 1.1770

EUR/USD rapidly reverses course and hits fresh YTD tops near 1.1780 at the end of the week. The pair’s U-turn comes on the back of the intense sell-off in the Greenback amid the generalised risk-on context.

GBP/USD climbs to four-month tops near 1.3600

GBP/USD is building on its solid weekly advance and is pushing toward the 1.3600 hurdle on Friday, or new four-month peaks. Cable’s strong move higher comes as the Greenback intensifies its decline, while auspicious results on the UK calendar also collaborate with the uptrend.

Gold picks up pace, approaches $5,000

Gold prices keep their uptrend well in place and gear up for an imminent hit to the key $5,000 mark per troy ounce on Friday. The yellow metal’s sharp advance gathers pace amid the increasing weakness in the US Dollar and mixed US Treasury yields across the curve.