GBP/USD wipes out gains, tests 1.30

Eren Sengezer FXStreet

Boosted by the selling pressure on the greenback, the GBP/USD pair reached its session high at 1.3043 but failed to sustain its bullish momentum. As of writing, the pair is trading at 1.3005, losing 0.23% on the day.

The US Dollar Index slipped to a fresh six-month low at the early trading hours of the NA session at 96.70 but started to recover towards the 97 handle amid a lack of fresh developments, which could increase the bearish pressure. At the moment, the index is at 96.90, still losing 0.09% on the day.

On the other hand, the investors remain hesitant to increase their long GBP positions ahead of the general election on June 8. Over the weekend, British PM Theresa May became the target of some heavy criticisms as she announced that a Conservative government would set an “absolute limit” on the amount that people pay for social care, which was assessed as a U-turn on plans included in her party’s election manifesto last week. Following May's comments, the latest Guardian/ICM poll showed that May's Conservatives' lead shrunk to 14 points over Labour. The poll now sees Conservatives at 47% (down 1%) and Labour at 33% (up 5%).

Later in the session, May is expected to deliver a speech at an election campaign event, which could be the next catalyst for the pair.

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Technical outlook

The initial hurdle for the pair aligns at 1.3050 (May 18 high) ahead of 1.3120 (Sept. 22 high) and 1.3200 (psychological level). On the downside, supports are located at 1.3000 (psychological level), 1.2940 (May 19 low) and 1.2845 (May 12 low).

GBP/USD likely between 1.2850 and 1.3050 – UOB

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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