UK/US Manufacturing PMI Eyed For Some Impetus

The GBP/USD pair staged a late rebound on Friday and managed to recover over 80-pips intraday to finally end the day comfortably above the 1.2600 round figure mark. Persistent Brexit/UK political uncertainties continued to dent sentiment surrounding the British Pound and dragged the pair to its lowest level since early-Jan. However, the ongoing US Dollar pullback, amid collapsing US Treasury bond yields, helped ease the bearish pressure, rather prompted some short-covering move on the last trading day of the week/month. 

The US President Donald Trump's unexpected announcement to slap tariffs on all goods coming from Mexico triggered a fresh wave of global risk-aversion trade and boosted demand for traditional safe-haven assets. The global flight to safety was evident from a free fall in the global bond yields, which exerted some downward pressure on the greenback and turned out to be one of the key factors behind the pair's recovery on Friday.
The uptick extended through the Asian session on Monday, albeit lacked any strong follow-through as investors seemed convinced that a pro-Brexit hardliner will replace the outgoing PM Theresa May and lead to a no-deal split. The incoming UK political and Brexit headlines might continue to play a key role in influencing the sentiment surrounding the Sterling. Market participants on Monday will also confront the release of manufacturing PMI prints from the UK and the US, which might further collaborate towards producing some meaningful trading opportunities. 

Looking at the technical picture, the pair on Friday showed some resilience below a short-term descending trend-line extending from mid-Jan. swing lows and now support prospects for some additional up-move. A follow-through recovery could get extended towards reclaiming the 1.2700 handle en-route mid-1.2700s, marking 23.6% Fibonacci retracement level of the 1.3381-1.2559 recent downfall. Any subsequent up-move seems more likely to face some stiff resistance and remain capped near the 1.2800 round figure mark.

 

On the flip side, the 1.2600 handle now seems to protect the immediate downside and is followed by the recent swing lows, around the 1.2560 region, below which the pair is likely to accelerate the slide towards challenging the key 1.2500 psychological mark en-route the 1.2480 area.

Image sourced from Pixabay

Posted In: NewsEurozoneForexMarketsGeneralFXStreetmanufacturingUnited Kingdom
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