• Market participants remain non-committal amid persistent Brexit uncertainties.
• Risk-on mood further collaborated towards keeping a lid on any runaway rally.
• Today’s ADP report and ISM PMI might help trader grab short-term opportunities.
The GBP/USD pair quickly reversed an early European session dip to the 1.2700 handle and has now recovered around 35-40 pips from daily lows.
The UK PM Theresa May’s Brexit comments, saying that “it’s my deal, no deal, or no Brexit at all” further raised hopes of a possible no Brexit option, though unlikely, and extended some support to the British Pound.
Earlier this week, the General Advocate for the European Court of Justice said that the UK could unilaterally revoke Article 50 had fueled hopes for British supporters of remaining in the European Union.
The uptick, however, lacked any strong conviction/follow-through as market participants remain non-committal ahead of the meaningful Parliamentary vote on the UK PM Theresa May’s negotiated deal on Dec. 11th.
Adding to this, a sudden spike in global risk-aversion provided a minor lift to the US Dollar relative safe-haven status and further collaborated towards keeping a lid on any meaningful up-move for the major.
Global risk sentiment took a sharp knock following the arrest of a leading Chinese executive in Canada, which threatened to escalate US-China trade tensions and dampened investors’ appetite for perceived riskier assets.
Developments surrounding the UK’s looming departure from the EU will remain the next big catalyst for the pair’s firm near-term direction. In the meantime, today’s US macroeconomic data – ADP report and ISM non-manufacturing PMI will be looked upon to grab some short-term trading opportunities.
Technical levels to watch
Any subsequent up-move is likely to confront resistance near the 1.2775-80 region and is closely followed by the 1.2800 round figure mark. On the flip side, the 1.2700 handle might continue to act as an immediate support, below which the pair is likely to head back towards challenging yearly lows, around the 1.2660 region.