- GBP/USD bounces from extremely oversold levels.
- UK economic data fail to disappoint or inspire the market.
- Brexit worries escalate and prevent up-move in the sterling.
GBP/USD largely ignored the UK economic data and held onto its modest gains, trading around 1.2825 as the Brexit worries kept escalating.
The pair had a very tough run yesterday, falling briskly from 1.3035 levels to below 1.2800 levels – a seven-week low. Today, GBP/USD recovered a bit from the 250 pips decline.
The impasse in the Brexit negotiations between the UK and the EU continued as the talks received another jolt from Britain’s Internal Market Bill and the EU threat of legal actions over the proposed bill.
Despite this backdrop, the pair regained some ground as the oversold conditions attracted bids from the 1.2775-70 region. But, it couldn’t draw much follow-through buying above 1.2800 as the UK monthly GDP missed market expectations.
The UK economy clocked 6.6 Percent growth in July, below 6.7 Percent expected, and down from 8.7 Percent previous. But, the Manufacturing and Industrial production data came above expectations. Both datasets point to the continued economic recovery.
The Sterling’s inability to extend the pullback, suggests the bears are in control, and further up-move could attract heavy selling by the bears.
The US session will wait for the US consumer inflation figures; the release, along with Brexit developments, will determine the action in the GBP/USD pair later in the day.