GBP/USD returns above 1.2900 after bouncing from 1.2880 lows
- GBP/USD picks up from day lows at 1.2880 and returns above 1.2900.
- The pound remains on the defensive amid a strong US dollar.
- Below 1.2928, GBP/USD's upside bias will be negated - Commerzbank.
The pound sterling has trimmed previous losses on the late US session, after bouncing from 10-day lows at 1.1880 to regain the 1.2900 level.
GBP remains weak amid overall USD strength
Cable has depreciated for the second consecutive day on Thursday, weighed by the overall US dollar strength. A combination of market concerns about the impact of the second COVID-19 wave, aggravated by the new round of lockdowns imposed in Europe and the uncertainty about the US elections has fuelled the US dollar to hit one-month highs against a basket of currencies.
On the positive side, the softer tone of the Brexit news this week seems to have offered some support for the sterling. With only two months to clinch a deal to avoid an unorderly exit from the EU, the status of the negotiations remain the main driver of the pound. On this backdrop, the extension of the talks this week has boosted the confidence of a last-minute agreement.
GBP/USD important support at 1.2928 - Commerzbank
On the technical domain, Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, points out to key support at 1.2928 to maintain the upside bias: “GBP/USD has eased back to, tested and held the near-term uptrend at 1.2928. While this holds, the market is capable of retesting the 1.3201 March high and the recent high at 1.3483(…)Below the 1.2928 uptrend lies 1.2814 the June high. Failure here will target 1.2709 the 200-day ma then 1.2445 and 1.2250/00.”
Technical levels to watch