GBP/USD trims losses but remains weak

Cable moved off daily low during the last hours amid a retreat of the US dollar. The greenback peaked after the release of US economic data (PPI and jobless claims) and then lost strength. 

US PPI consistent with moderate inflation – Wells Fargo

US: Weekly initial claims was 243,000, a decrease of 15,000 from previous week

GBP off lows, still under pressure 

The pound remains among the worst performers in the market on Thursday. It tumbled amid Brexit jitters following comments from Michel Barnier, EU’s chief Brexit negotiator. He said that talks regarding the “divorce bill” reached a “deadlock”. 

UK’s Davis: much work still needs to be done in Brexit talks

After experiencing a rally during September on the back of rate hike expectation from the Bank of England, the pound now is back under pressure on Brexit concerns. 

GBP/USD lost today more than a hundred pips from the highs, breaking relevant short-term uptrend lines. It bottomed at 1.3118, the lowest since Monday and at the moment of writing is trading at 1.3170/75, at the highest since the beginning of the American session.

Levels to watch 

The pair is now testing the 1.3170/80 area, that yesterday was a strong intraday support. If it rises on top, the next challenge would be to recover 1.3200. Above the next resistance levels lies at 1.3220 and 1.3260/65 (daily high).

If GBP/USD is unable to rise back on top of 1.3170/80, the bearish bias is likely to persist. From the current level, the immediate support is the 1.3120 area followed then by 1.3075 (Oct 9 low). 

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