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GBP/USD sticks to gains near mid-1.3000s, lacks follow-through ahead of US data

  • GBP/USD gained some traction on Wednesday after upbeat US Services PMI.
  • Stronger USD, fears of a no-deal Brexit kept a lid on any further positive move.
  • Traders now eye the US ADP report and ISM PMI for some trading impetus.

The GBP/USD pair held on to its mildly positive tone around mid-1.3000s through the mid-European session, albeit seemed struggling to build on the momentum.

The pair quickly reversed an early dip to the vicinity of the key 1.30 psychological mark and turned higher for the second consecutive session on Thursday following an upward revision of the final UK Services PMI print for January.

The upside remains limited

However, a combination of factors – including stronger US dollar and fears of a no-deal Brexit – held investors from placing any aggressive bullish bets and eventually kept a lid on any further positive move, at least for the time being.

The greenback extended its positive momentum for the third consecutive session and got an additional boost from a goodish intraday pickup in the US Treasury bond yields amid some positive developments in the coronavirus saga.

Meanwhile, investors remained concerned that Britain might crash out of the European Union at the end of the transition period, which continued undermining the British pound and further collaborated towards capping any strong gains.

Hence, it will be prudent to wait for some strong follow-through buying before traders could start positioning for any further near-term appreciating move. Moving ahead, market participants now look forward to the US macro data for a fresh impetus.

Wednesday's US economic docket highlights the release of the ADP report on private-sector employment and will be followed by the ISM Non-Manufacturing PMI, which will influence the USD price dynamics and produce some trading opportunities.

Technical levels to watch

 

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