GBP/USD slumps below 1.29 as DXY advances to fresh 2019 highs

GDP data from UK disappoint on Monday.
US Dollar Index extends its rally into an eighth straight day.
UK PM May's spokesman says meaningful vote won't take place this week.

Eren Sengezer FXStreet

The GBP/USD pair came under heavy selling pressure during the European trading hours after the data from the UK, once again, highlighted the economic slowdown in the UK. With the greenback gathering further strength in the second half of the day, the pair extended its slide to a new daily low of 1.2867. As of writing, the pair was trading at 1.2877, losing 0.53% on a daily basis.

Earlier today, the UK's Office for National Statistics reported that the real GDP (preliminary) expanded by 1.3% on a yearly basis in the fourth quarter of 2018 after growing by 1.6% in the third quarter and fell short of the market expectations of 1.4%. Underlying details of the report revealed that the total business investment contracted by 3.7%, annually, in the same period. According to other data, industrial production and manufacturing production declined by 0.5% and 0.7%, respectively, on a monthly basis in December.

Meanwhile, supported by a more-than-1% increase seen in the 10-year Treasury bond yield, the US Dollar Index gained traction on Monday and rose to its highest level of 2019 near 97 in the NA session to drag the pair even lower.

On Brexit-related headlines, British Prime Minister spokesman today announced that the meaningful vote was not expected to take place this week while announcing the PM will make a statement in the Parliament on Tuesday to update lawmakers on Brexit talks.

Technical levels to consider

The initial support for the pair aligns at 1.2845 (50-DMA) ahead of 1.2815 (Jan. 14 low) and 1.2730 (Jan. 10 low). On the upside, resistances are located at 1.2900 (psychological level), 1.2950 (200-DMA) and 1.3025 (20-DMA).

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.

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