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GBP/USD steady above 1.33, headed for highest weekly close in two months

  • Greenback suffers losses despite thin trading volume on Friday.
  • Manufacturing and Services PMI data from the U.S. disappoint.
  • GBP/USD gains nearly 130 pips on the week.

The GBP/USD pair pushed above the 1.33 mark during the European trading hours on Friday following some optimistic comments from British Prime Minister Theresa May and European Commission President Juncker. In the second half of the day, a broad-based selling pressure seen on the greenback provided an additional boost to the pair, lifting it to its highest level since October 2 at 1.3360. However, the pair started to retrace its gains amid profit taking and was last seen trading at 1.3330, up 0.17% on the week.

Following her meeting with Jean Claude Juncker, Theresa May told reporters that they were going to elaborate on positive talks that they were having on Brexit on December 4. Juncker further added that he was expecting Brexit negotiations to go in a good direction.

Today's data from the United States showed that the business activity in both the manufacturing and the service sector expanded at a slower pace than expected as suggested by the Markit PMI data. The US Dollar Index, which came under a heavy selling pressure in mid-week following FOMC's surprisingly dovish tone in its November meeting minutes, extended its losses and refreshed its lowest level since mid-October at 93.61. With American markets closing early, the Index started to consolidate its losses in the US afternoon. As of writing, the DXY was at 92.72, down 0.35% on the day. On a weekly basis, the index is on track to record its third straight negative close.

Technical outlook

The RSI indicator on the daily graph continues to edge higher above the 50 mark, suggesting that the bullish momentum is gaining strength. According to FXStreet's Technical Confluences Indicator, the initial hurdle for the pair aligns at 1.3375, where the Fibo 38.2% retracement of the monthly range is located. Above that level, 1.3455 (Sep. 28 high) and 1.3500 (psychological level) could be seen as following resistances. On the downside, supports could be encountered at 1.3280 (daily low), 1.3200 (psychological level/50-DMA) and 1.3160 (100-DMA).

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