GBP/USD fails to hold above 1.29 despite USD sell-off
Although the GBP/USD pair recovered all of its losses on the back of a greenback sell-off and rose to a fresh session high at 1.2904, it failed to preserve its gains. As of writing, the pair was trading at 1.2870, losing 0.1%, or 13 pips, on the day.
Following the dismal nonfarm payroll report from the United States, the US Dollar Index slipped to its lowest level below 97 handle since Trump's election victory in early November. After the initial drop-off to 96.66, the index retraced some of its losses and is now at 96.75, down 0.42% on the day.
- US Dollar slumps to fresh 2017 lows post-NFP
- US: Total nonfarm payroll employment increased by 138,000 in May
Regardless of the greenback weakness, the pair struggled to sustain its bullish momentum as the GBP is not seen as a good investment alternative ahead of the elections in the U.K. Although the latest polls suggest that Prime Minister May's Conservatives are still in lead, it's still unclear if she is going to be able to receive enough votes to get the majority and the possibility of a hung parliament increases the political uncertainty.
- UK: May's way or the highway – Rabobank
- GBP: Guided by political permutations - Rabobank
- IPSOS Mori Poll: Labour narrows gap to just 5 points against Conservatives
Technical levels to consider
1.2820 (Fibo 23.6% retracement of March - May rise) seems to be an important technical support for the pair ahead of 1.2690 (Fibo 38.2%) and 1.2605 (100-DMA). On the upside, a weekly close above 1.29 (psychological level) could allow for further recovery but it's unlikely to witness a meaningful rebound before the election. 1.3000 (psychological level/May 24 high) and 1.3050 (May 18 high) could be the next hurdles.