• Quickly surrenders upbeat UK services PMI led uptick to 1.3200 neighbourhood.
• Investors looked past the latest Brexit optimism and continue unwinding GBP longs.
• A modest USD uptick adds to the bearish pressure ahead of Carney’s testimony.
The GBP/USD pair faded an early European session uptick and quickly retreated around 50-pips from the vicinity of the 1.3200 round figure mark.
The British Pound got a minor lift after the UK services PMI print came in much better than expected, albeit was quickly sold into as the finer detail of the report were less encouraging and showed that activity remains subdued amid Brexit uncertainty.
As James Smith, developed markets economist at ING, points out: “Probably the most alarming detail – if perhaps not the most surprising – is that employment numbers are slipping at their fastest rate in seven years as firms put the brakes on hiring ahead of Brexit.”
The pair drifted back into bearish territory for the fourth consecutive session and was further weighed down by a modest pickup in the US Dollar demand, which remained supported by the latest leg of an upsurge in the US Treasury bond yields.
Moving ahead, a scheduled meeting between UK Brexit Secretary Barclay, Attorney General Cox and the European Union's Chief Brexit negotiator Michel Barnier, which coupled with the BoE Governor Mark Carney’s testimony will now be looked upon for some fresh impetus.
In the meantime, the US economic docket, highlighting the release of ISM non-manufacturing PMI and pending home sales data, might also produce some meaningful short-term trading opportunities during the early North-American session.
Technical levels to watch
Yohay Elam, FXStreet's own Analyst offers important technical levels to watch for and writes: “The Technical Confluences Indicator shows that cable faces fierce resistance in the area between 1.3197 to 1.3218. The next cap is quite close as well: around 1.3245.”
“The good news for GBP/USD is that it also enjoys significant support. 1.3135 is the convergence of the Fibonacci 38.2% one-month and the Pivot Point one-day Support 1. Yet if it falls further, the next cushion is only at 1.3053,” he added further.
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