GBP/USD finds support once again near 1.2420 post-UK data

The recovery in the GBP/USD pair remains capped near 1.2470 region, with the bears retaining control amid poor UK data and hard-Brexit fears.

GBP/USD awaits NFP

The cable remains under heavy selling pressure, with weaker-than expected UK industrial and manufacturing production driving the rate back towards the newly-found support near 1.2420 region. Although the spot manages to quickly recover some ground and reverts towards familiar range around 1.2450 levels seen pre-data release.

The UK manufacturing production surprises negatively in Aug, coming in at +0.5% y/y against +0.80% expected and +0.70% previous. While total industrial production data for Aug stood at 0.70% y/y against +1.30% expected and 2.10% last.

The bears remain in command as sentiment remains unfavorable amid renewed Brexit-related jitters, triggered by comments from the French president Hollande. Earlier on the day, Hollande referred to the possibility of a hard Brexit in order to protect the future of the EU, according to a report in the Financial Times.

Later today, the US labor market report will grab a lot of eyeballs, as an upbeat print may almost confirm a Dec Fed rate hike, eventually triggering a fresh rally in the US dollar across the board.

GBP/USD Levels to consider            

Omkar Godbole, Analyst at FXStreet noted, “Round figures could continue to act as a support on the downside. If we plot Fib extensions on a move from July 2014 high – Apr 2015 low – June 2015 high suggests a strong support does exist around 1.2217 (141.4% Fibo extension).”

“On the higher side, 1.2458 (61.8% of Nov 2007 high – Jan 2009 low – July 2014 high) could act as a resistance, above which 1.26 could be put to test.”