GBP/USD stays quiet below 1.29 as Beige Book doesn't offer anything new
The GBP/USD rose above 1.29 in the NA session on Wednesday, recovering a majority of Friday's heavy losses but failed to stretch further amid a lack of fresh fundamental catalysts. The pair has been spending the last couple of hours in a tight range below 1.29 and is now trading at 1.2880, up 0.18% on the day.
The pair's upsurge on Wednesday was fueled by a stronger cable and a weaker greenback. The latest polls suggested that British Prime Minister Theresa May's Conservatives are making up lost ground against the opposition Labour party, easing the concerns surrounding a potential political instability in the U.K.
- UK election: Conservatives stretch lead over Labour
- SurveyMonkey Poll: UK Conservatives 44% vs. Labour Party 38%
On the other hand, the greenback struggles to find interest from investors as the dismal data macro from the U.S. jeopardize the odds of 2 more rate hikes in 2017. Federal Reserve's Beige Book didn't present anything surprising to the markets as it revealed that most Fed districts reported their economies continued to expand at a modest or moderate pace from early April through late May. Now investors turn their attention to Friday's NFP report.
- Fed Beige Book: Majority of districts said firms expressed positive near-term outlook
Additionally, profit taking on the last day of the month may have contributed to the pair's correction as well. On a monthly basis, the pair is still down nearly 50 pips.
Technical outlook
With a monthly close above 1.2820 (Fibo 23.6% retracement of March - May rise) the pair could extend its gains but it may have a difficult time doing so as investors are likely to refrain from taking heavy positions ahead of the U.K. election. 1.2920 (daily high/20-DMA) could be seen as the first technical resistance ahead of 1.3000 (psychological level/May 24 high) and 1.3050 (May 18 high). To the downside, a break below 1.2820 could open allow for further slippage towards 1.2690 (Fibo 38.2%) and 1.2595 (100-DMA).