- GBP / USD has seen a sharp reversal below 1.3300 in recent trading amid a resurgence in the US dollar due to strong PMI data.
- If anything, GBP / USD remains the best performing major USD pair on the day, fueled by Brexit hopes and the incoming end of the national lockdown.
- The cross achieved a bullish breakout of a long-term uptrend channel early in the session, although these gains have now eroded.
The GBP/USD it has fallen more than 130 pips from the highs near 1.3400 reached at the beginning of the American session. The pair has fallen back to daily lows at 1.3264, and at time of writing it is trading above 1.3290, losing 0.02% on the day.
PMI data for the United States favored the dollar’s resurgence, after the Manufacturing PMI index rose from 53.4 to 56.7 in November, surpassing the expectation that was for a reading of 53. Regarding the service sector index, it went from 56.9 to 57.7, the consensus being 55.3.
What to expect from GBP / USD?
In terms of what’s next for the crossover, obviously a lot depends on 1) whether this recent outbreak of USD strength can last and 2) whether the EU and UK can close a Brexit deal in the very near future. If the answer to the first question is yes and the second is no, GBP / USD could be looking for a retest of the November 12 lows and its 21-day moving average just above 1.3100, and even the lower bounds of the long-term pair of the uptrend channel, which would likely come into play around 1.3040.
If the answer to the first question is no and the second yes, then this could prove to be more of a temporary pullback for GBP / USD, which could soon be testing Monday’s highs just below 1.3400 and maybe even looking at a test. year-to-date highs in 1.3483.
Technical Levels
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