GBP/USD struggles near 1-week lows, around 1.3100 handle

Haresh Menghani FXStreet

• A modest USD retracement helps recover early lost ground to over 1-week lows.
• Brexit uncertainties/dismal UK retail sales data kept a lid on any meaningful up-move.
• Investors look forward to fresh Brexit-related headlines from the ongoing EU summit.

The GBP/USD pair struggled to build on its intraday recovery move from over one-week lows and is currently placed in neutral territory, just above the 1.3100 handle.

The pair, for the second time this week, showed some resilience below 100-day SMA and quickly reversed an early dip to an intraday low level of 1.3076. The uptick was supported by a modest US Dollar retracement from near two-week lows, albeit lacked any strong follow-through.

Against the backdrop of persistent Brexit uncertainties, the British Pound was further weighed down by today's worse than expected UK monthly retail sales data, showing a sharp fall of 0.8% in September, the biggest drop in six months.

Adding to this, the prevalent cautious mood across global financial markets, amid resurfacing US-China trade war fears, benefitted the USD's relative safety against its British counterpart and further collaborated towards keeping a lid on any meaningful up-move.

Despite a combination of negative factors, the downside remained limited as investors now seemed reluctant to place any aggressive bets and preferred to wait for any fresh Brexit news/developments from the second day of a crucial EU summit in Brussels.

Technical levels to watch

A convincing break below the 1.3080-75 region is likely to accelerate the fall towards the key 1.30 psychological mark with some intermediate support near the 1.3035 level. On the flip side, the 1.3130-35 region now seems to have emerged as an immediate resistance, above which the pair is likely to aim towards reclaiming the 1.3200 round figure mark.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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