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GBP/USD struggles for direction, remains capped below 1.3000 mark

  • GBP/USD was seen consolidating the previous day’s volatile intraday swings.
  • The optimism over a possible Brexit deal extended some support to the pair.
  • BoE negative interest rate talks held bulls from placing any aggressive bets.

The GBP/USD pair lacked any firm directional bias on Friday and seesawed between tepid gains/minor losses through the early part of the European trading session.

Following the previous day's intraday volatility, the pair now seems to have stabilized near the top end of its weekly trading range. The overnight optimistic Brexit-related comments by the European Commission President Ursula von der Leyen, saying that a trade deal between the EU and the UK is still possible, extended some support to the British pound.

This coupled with the prevalent selling bias surrounding the US dollar further collaborated towards limiting the downside for the GBP/USD pair. Doubts over the sustainability of the US economic recovery kept the USD bulls on the defensive. The market worries resurfaced following the release of Thursday's rather unimpressive US macroeconomic data.

Despite the supporting factors, the GBP/USD struggled to attract any meaningful buying and remained below the key 1.3000 psychological mark. The fact that the Bank of England discussed implementing negative interest rates at the September policy meeting on Thursday kept a lid on any strong gains for major, at least for the time being.

This makes it prudent to wait for some strong follow-through buying before traders again start positioning for an extension of the recent strong recovery move from multi-week lows, around the 1.2760 region touched last Friday.

Market participants now look forward to the release of the Michigan Consumer Sentiment Index for September, scheduled later during the early North American session. The data might influence the USD price dynamics and produce some short-term trading opportunities on the last day of the week.

Technical levels to watch

 

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