GBP/USD drops below 1.30 as USD catches fresh bids on solid data

The GBP/USD pair, which spent the first half of the day consolidating above the 1.30 handle, came under a renewed selling pressure in the NA session and plummeted to its lowest level since July 21 at 1.2957. As of writing, the pair was trading at 1.2964, losing 70 pips, or 0.54%, on the day.

This recent downfall seems to be a product of the increase in the USD demand. JOLTS Job Openings came in at 6.163 million for June, beating the market expectation of 5.775 million, while the IBD/TIPP Economic Optimism index improved to 52.2 from 50.2, recording its highest reading since March. After the robust data, the US Dollar Index inched closer to last Friday's high of 93.64. At the moment, the index is at 93.57, gaining 0.3% on the day.

• US: Streak of economic optimism continues - IBD/TIPP Poll
• US: Job openings increase in June; hires and separations little changed

On the other hand, investors remain hesitant to take any large cable positions as the uncertainty surrounding the Brexit negotiations continue to cloud their visions. According to a recent article published by Sky News, a number of position papers, which could determine whether or not the U.K. could move on the second stage of negotiations, will be published in the next two weeks. The article also claimed that the PM Theresa May is expected to 'harden up' her negotiating position after the recess is over.

On Wednesday, Inflation Report Hearings in the U.K. could be the next significant catalyst as a weak inflation outlook is likely to hurt the expectations of a tightening move by the BoE before the end of the year.

Technical outlook

With today's losses, the RSI on the daily graph started to ease towards the 30 mark, suggesting that the bearish momentum is building up. 1.2940 (50-DMA) could be seen as the initial support for the pair ahead of 1.2900 (100-DMA) and 1.2810 (Jul. 12 low). On the upside, resistances are located at 1.3070 (20-DMA), 1.3160 (Aug. 4 low) and 1.3260 (Aug. 3 high).

• GBP/USD still room for a test 1.2955 – UOB