GBP/USD rises further to the 1.2900 area, trims weekly losses

The US dollar pulled back further during Friday’s American session, pushing GBP/USD to the 1.2900 area. Cable hit a 2-day high at 1.2895 and it was about to end the week hovering around 1.2885, a daily gain of almost a hundred pips but 50 pips below the level it had a week ago. 

“The Brexit uncertainty and the defeat of the UK Prime Minister in House of Commons were the major drivers of the market sentiment over the past week and Brexit headlines are poised to remain the major factor of the currency move in the upcoming week as well”, said Mario Blascak, FXStreet's European Chief Analyst.

Data from the US and the UK over the week showed a mixed bag of numbers. The negative surprises from the US weigh on the greenback. In the US, next week FOMC minutes are due while in the UK, labor market figures will be released. China-US talks will continue and also the Brexit drama. 

“In the UK, with six weeks to Brexit day, focus remains on the negotiations. While most would have preferred more clarification by now, it is unsurprising that they are dragging on. It is normal in political negotiations to get much closer to the deadline before
politicians are willing to compromise. PM Theresa May will continue talks with the EU27 in late February, when she has also promised a new Brexit vote”, wrote Danske Bank analysts. 

GBP/USD Short-term levels to watch 

Friday’s rally could signal some short-term bottom for the pair particularly if it manages to rise back above 1.2910. The next key resistance is the 1.3000 area. On the downside, below 1.2890 the bearish pressure is likely to intensify.