GBP/USD approaches highs near 1.2250

The Sterling is trading on a firm fashion at the beginning of the week, taking GBP/USD to the area of daily highs in the 1.2240/50 band.

GBP/USD attention to US data, UK GDP

The pair keeps the trade in a narrow range since the GBP ‘flash crash’ on October 10, with decent support in the 1.2080 area and gains so far limited around the 1.2330 region.

The upside momentum in the greenback remains the exclusive driver for the pair’s downside in past sessions, always propped up by increasing expectations of a Fed’s rate hike by end 2016.

In the meantime, GBP remains under pressure and vigilant on ‘hard Brexit’ headlines, while GDP figures due later in the week should give markets a better idea how the UK economy is faring following the ‘Brexit’ vote in late June.

It is worth mentioning that recent UK data showed stronger than expected PMIs from the manufacturing and services sector and higher inflation figures, although retail sales have disappointed initial estimates.

There were no surprises on the GBP’s positioning side during the week ended on October 18, with speculative net shorts still in record levels around 90K contracts according to the latest CFTC report.

GBP/USD levels to consider

As of writing the pair is gaining 0.07% at 1.2240 facing the immediate hurdle at 1.2327 (high Oct.18) followed by 1.2377 (high Oct.11) and finally 1.2459 (20-day sma). On the flip side, a breakdown of 1.2086 (low Oct.11) would open the door to 1.1450 (low post-‘flash crash’ Oct.7).