GBP/USD: looking a little better here at 1.3450, but is it?
- GBP/USD moving back to 1.3450 key level.
- GBP/USD benefits from Brexit hopes and shrugs off poor UK data, rallies on poor US data instead.
In respect to Brexit, the reports of a Brexit breakthrough yesterday were premature. "An under-appreciated aspect of the negotiations perhaps is the very delicate balancing act that PM May needs to perform to keep her government intact (with the support of Northern Ireland’s DUP) and the pro- and anti-EU components of her own party on side," explained analysts at Scotiabank.has started to penetrate the 1.3450 level and is extending the recovery from 1.3370 while the UK seems to be close to an agreement with EU in Brexit talks with just a small number of issues that remain and while the Markit’s services PMI and the ISM non-manufacturing dropped in November to 54.5 (vs 55.4 expected) and 57.4 (vs 59.0) respectively. Currently, GBP/USD is trading at 1.3446, down -0.13% on the day, having posted a daily high at 1.3485 and low at 1.3371.
- US: Non-manufacturing sector grew at a slower rate in November - ISM
- US: Service sector output expansion softens to 5-month low - Markit
In terms of data, as the aforementioned data event weighed in the dollar, so did the weaker that expected UK PMI data for November for the pound. We now await the US ADP report as a prelude to the forthcoming NFP's data on Friday ahead of next week's FOMC expected rate rise.
"GBPUSD was rejected at 1.3550 again yesterday and the drop under low point between the two recent tests of resistance in the mid 1.35s (1.3422) sets up a potential double top signal on the short-term charts (implying the risk of a drop back to the upper 1.31s), explained analysts at Scotiabank who added, "the downside does appear to be the weaker side of the Cable market at the moment."