GBP/USD rebounds and rises back above 1.2900, consolidates weekly gains
- Weaker US dollar sends GBP/USD back above 1.2900.
- Cable remains in a big range, ahead of UK elections.
The GBP/USD pair rebounded from 1.2880 and climbed to 1.2937, approaching weekly highs. The move took place amid a retreat of the US dollar across the board. The greenback weakened despite higher US yields. Low volume prevails on Friday amid holidays in the US.
The US Dollar Index (DXY) reversed from monthly highs and turned negative for the day, falling below 98.30. No particular trigger was behind the reversal of the greenback while the pound held steady versus other currencies. The end of the month and low liquidity across markets probably exaggerate moves.
Cable is about to end the week higher, with a gain of almost a hundred pips but still remains in a consolidation range, trapped between 1.2800 and 1.3000.
Week ahead
On Monday, markets will likely be back to normal. Over the week, key economic reports from the US to be release include the ISM manufacturing and non-manufacturing indices and next Friday, the official employment report. US-China negotiations will also be watched closely.
In the UK the economic calendar is light for next week. The only relevant report are the PMIs (final estimation). “Focus remains on the 12 December election and its outcome. This week, saw the release of results from the acknowledged MRP model from YouGov predicting an absolute majority for the Conservative Party (359 seats versus 326 seats to secure a majority), making it possible for Boris Johnson to pass his Brexit deal before Christmas, which is now our base case”, mentioned Danske Bank analysts.