GBP/USD: Rebound capped near 1.2870 ahead of US data

After a brief phase of downside consolidation around 1.2815 levels, the GBP/USD pair finally broke higher and rallied hard in the European session on the back of aggressive selling seen in the US dollar across the board.

GBP/USD regains 5-DMA at 1.2852

Over the last hours, the spot is seen struggling to extend the upside beyond 1.2870 levels, as the US dollar stalls its downslide against its main competitors, while looming uncertainty around the UK elections continues to keep a lid on any recovery attempts. According to the latest UK Times poll showed that May's Conservatives lead shrunk to only 6 points against the Labour Party 43% vs. 37%. 

Moreover, risk-off sentiment seeps back into markets amid renewed selling seen in oil and stock prices, weighing down on the higher-yielding currency GBP. In absence of macro news from the UK docket, all eyes now remain on the US Core PCE price index, personal spending and consumer confidence data for fresh trading impetus.

GBP/USD Levels to consider            

Valeria Bednarik, Chief Analyst at FXStreet noted: “Technically, the 4 hours chart shows that the price is currently struggling to regain ground above a bearish 20 SMA, but also that it already recovered above its 200 EMA, whilst technical indicators have extended their recoveries from oversold levels, and now head north around their mid-lines, not enough to confirm a bullish extension, but at least limiting chances of a short term slide. “

“Beyond 1.2880, the pair has room to extend its recovery towards the 1.2930 region, whilst beyond this last 1.2960 comes next. 1.2830 is the immediate support, en route to 1.2793, the daily low, with a break below it opening doors for a steeper decline towards the 1.2760 region,” Valeria added.