GBP/USD bounces-back to 1.3350, as USD selling resumes

• DXY back in the red zone.
• The UK’s post-Brexit economic plan in focus.
• Eyes on the UK PM May’s visit to Brussels

The GBP/USD pair catches a fresh bid tone in the European session, now bouncing back towards the 1.3350 barrier amid positive European equities and fresh USD selling across the board.

UK’s economic plan, BOE inflation report hearings, and Nov PMIs – key focus this week

Cable stalled its retreat from seven-week tops of 1.3361 just ahead of the 1.33 handle, as the bulls regained poise amid resurgent broad-based USD supply. The US dollar reversed the Asian recovery and fell back in the negative territory, as investors turn cautious ahead of the Fed Chair nominee Powell’s Congressional testimony due tomorrow, followed by Fed Chair Yellen’s testimony on the economy.

Moreover, the pound got a lift from the expectations of some optimistic reform measures to be introduced, when the UK announces its post-Brexit economic plans later today, especially after Britain pitched a new strategy for industry earlier today that sees greater state intervention to tackle weak productivity and post-Brexit concerns.

Further, a recovery in the risk sentiment amid higher European equities and Treasury yields also aided the latest leg up in the major. However, markets remain wary over the looming Brexit deal, with the Dec 4. Deadline fast approaching for the UK to work on their Brexit divorce bill offer while the EU’s Chief Brexit Coordinator was reported last hour, as saying, “four freedoms of the single market are indivisible.”

In the day ahead, the pair will closely track the USD dynamics and risk trends amid a lack of economic news from the UK docket. Meanwhile, the BOE MPC member Haldane’s speech and the US new home sales data will be eyed in the NA session.

GBP/USD Technical Levels

Jim Langlands at FX Charts writes: “The daily momentum indicators still appear to be looking mildly constructive, and further gains do seem possible, where a break of 1.3360 would allow a run to 1.3400+ and possibly to where the major descending trend resistance from the 2014 high comes in at 1.3450. On the downside, minor support will again be seen 1.3280/00 ahead of 1.3240 and buying dips would currently seem to be the plan.”