GBP/USD slumps to fresh 2-week lows near 1.3020 on broad-based USD strength
- UK PM May doesn't offer anything new in press conference in Brussels.
- US Dollar Index surges to fresh 9-day high on Thursday, approaches 96.
- Fed's Quarles voices his support for more rate hikes.
After moving sideways near the 1.31 mark during the first half of the day, the GBP/USD pair came under a consistent selling pressure during the American trading hours and fell to its lowest level in two weeks at 1.3022. As of writing, the pair was trading a couple of pips above that level, losing 0.7% on a daily basis.
The lack of progress in Brexit negotiations weighed on the pound on Thursday. Following her meeting with EU leaders at the EU summit in Brussels, British Prime Minister Theresa May appeared at a press conference and said she was convinced that they would be able to reach a good deal. "The idea of extended transition is an idea that has been around a while. We are not proposing an extension to the implementation period," May further added. Meanwhile, European Council President in a published statement stated that EU27 confirmed their desire to continue Brexit talks in a positive spirit. "We should be clear that, as for now, not enough progress has been made," the document further read. Reflecting the GBP weakness, the EUR/GBP pair rose to a daily high above 0.88.
On the other hand, the USD continued to gather strength against its peers after closing the day on a positive note yesterday on the back of hawkish FOMC September meeting minutes. Speaking at the Economic Club of New York Luncheon, Randal Quarles, Federal Reserve board member and Vice Chair for Supervision, note that he expected more gradual rate hikes than most of his colleagues at the Committee. Additionally, today's upbeat data provided an additional boost to the buck. At the moment, the DXY is at its highest level in nine days at 95.95, adding 0.3% on the day.
- US: Conference Board Leading Economic Index increase0.5% in September to 111.8.
- Philly Fed Manufacturing Activity Index edges down to 22.2 in October vs 20 expected.
- US: Initial weekly jobless claims decreased by 5,000 to 210,000.
Technical level to watch for
The initial support for the pair aligns at 1.3000 (psychological level) ahead of 1.2925 (Oct. 3 low) and 1.2855 (Sep. 3 low). On the upside, resistances could be seen at 1.3050 (100-DMA), 1.3100 (20-DMA) and 1.3130 (daily 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.
