GBP/USD corrects to 1.3140 amid notable USD demand

The GBP/USD pair failed to sustain the recovery mode near 1.3160 levels, sending the rates back to test the 100-DMA support of 1.3141, as the US dollar continues to remain broadly underpinned.

GBP/USD headed to 1.3100?

The spot is trying hard to regain the mid-point of 1.31 handle, as upbeat Halifax HPI data from the British economy appears to have offered some respite to the GBP bulls.

United Kingdom Halifax House Prices (MoM) registered at 0.3% above expectations (0.2%) in October

However, it remains to be seen for how long the major can sustain the recovery mode amid notable US dollar demand, as the divergent monetary policy outlooks between the Fed and BOE come back to the fore ahead of the Fed Chair Yellen’s speech scheduled later on Tuesday.

Moreover, downbeat BRC retail sales data, which came in at -1% in three months to October vs. 1.9% previous, continues to weigh down on the investors’ minds. Also, a lack of clarity on the Brexit deal, with most senior EU officials see over a 50% chance of a ‘no Brexit deal’, further dampens the sentiment around the GBP/USD pair.

Markets now await the US JOLTS job openings data and Fedspeaks for the next direction on the US dollar, eventually impacting the pair.

GBP/USD Technical View

Slobodan Drvenica at Windsor Brokers Ltd., noted: “Mixed signals from daily chart see no clear direction, as the pair hesitates ahead of plethora of barriers at 1.3190 (20/55SMA forming bear-cross) and 1.3214 (daily cloud base). Sustained break here is needed to signal fresh upside and expose key barriers at 1.3320 zone (tops of near-term congestion). On the downside, rising 100SMA marks first pivot at 1.3091, loss of which would expose key supports at 1.3038/26 (lows of 03 Nov / 06 Oct).”