- Investors looked past Tuesday’s upbeat UK wage growth data.
- Fears of a no-deal Brexit keeps a lid on any meaningful up-move.
- A modest USD strength further collaborates towards capping.
The GBP/USD pair quickly retreated around 25-30 pips in the last hour, albeit has managed to hold with modest daily gains around the 1.2695-1.2700 region.
The British Pound got a goodish lift after the latest UK employment details showed that headline wages ticked up to 3.1% for the three months to April, while the ex-bonus measure - at 3.4% 3m/y, was also stronger than consensus estimates.
This was followed by some hawkish comments by the BoE MPC Michael Saunders and further contributed to the pair's positive momentum to an intraday high level of 1.2728, though persistent Brexit uncertainties kept a lid on any strong follow-through.
Increasing feats that a hard-line Brexiteer could be the next British PM and lead to a no-deal split, coupled with a mildly positive tone around the US Dollar turned out to be the key factors holding investors from placing any aggressive bullish bets.
As Yohay Elam, FXStreet's own Analyst explains – “The leading candidate remains Boris Johnson and he supports leaving on October 31st, with or without a deal. The pound has suffered when the odds of a no-deal Brexit have risen and it may happen again.”
It would now be interesting to see if the pair is able to find any buying at lower levels or resumes with its overnight pullback from the 1.2750 supply zone as traders now look forward to the release of the US Producer Price Index (PPI) for some fresh impetus.
Technical levels to watch
Yohay offers important technical levels to trade the major and writes – “Resistance awaits at 1.2750 which capped GBP/USD three times in May and June and then by 1.2763 which capped it on Friday. Further up, 1.2815 and 1.2870 are eyed.”
“Support awaits at 1.2685 which has been the initial sub-1.2700 point in May and also provided support today. It is followed by 1.2640 that is the starting point of the channel, then by 1.2605 which was a low point in late May, and finally by 1.2558 – the four-month low,” he added further.
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