GBP/USD takes a sharp U-turn, back below 1.3200

The GBP/USD pair failed to sustain the bounce above 1.32 handle and reversed sharply below the last, as the USD buyers returned to markets in Europe, despite weaker US rates and European equities.

GBP/USD sold-off near 1.3230

The spot came under fresh selling pressure on the European open and reversed entire gains to hit session lows of 1.3186, after the European equities set-off on a delicate footing, which diminished the bids for risk assets such as Treasury yields, GBP etc.  

Meanwhile, renewed worries over Spain – Catalonia stand-off hit the markets on the Spanish Deputy PM Santamaria’s comments, knocking off the EUR/USD pair, which boosted the greenback across its main competitors, in turn triggering fresh selling in Cable.

Also, the European traders reacted to the overnight remarks from the European Commission President Jean-Claude Juncker, following his last week’s meeting with the UK PM May, collaborating to the latest leg down in the major.

Focus now remains on the UK CBI industrial order expectations data for fresh impetus on the pound, in absence of significant macro news from both the UK and US today.

GBP/USD Technical View

Jim Langlands at FX Charts noted: “While the dailies remain flat, suggesting further choppy, sideways trade, the short term momentum indicators look positive for Monday and a run towards the descending trend resistance at 1.3230 would not surprise. A break of this would allow a move towards 1.3280 and potentially back to the mid October high of 1.3337. On the downside, minor support will be seen at 1.3160 and at 1.3130 ahead of 1.3100.”