GBP/USD keeps the red near weekly lows after US data

Having posted a session high of 1.2930, the GBP/USD pair changed course and plunged to fresh weekly lows. The pair, however, had a muted reaction to mixed US data and held weaker just above mid-1.2800s. 

The US Dollar managed to preserve its strong recovery gains after the latest data showed a goodish 0.4% m-o-m increase in personal income, as compared to 0.3% growth expected. The positive reading to some extent got negated by slight disappointment from spending data, coming in at 0.3% m-o-m in July vs. 0.4% expected. 

Meanwhile, a modest decline in the Fed's preferred inflation measure - the core PCE deflator, at 1.4% y-o-y for July, as compared to 1.5% recorded last month, was in-line with consensus estimates and did little to provide any fresh impetus. 

Meanwhile, the British Pound was also being weighed down by persistent uncertainty around the ongoing Brexit negotiations.

Today’s US economic docket also features the release of Chicago PMI and pending home sales data, which again is unlikely to prove to be a game changer ahead of Friday’s official NFP report.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes, "the pair presents a short term bearish tone, given that in the 4 hours chart, the pair is below its moving averages, whilst technical indicators gain downward momentum within negative territory. The weekly low was set at 1.2873 on Monday, being then, the immediate support. A bearish acceleration through the level exposes 1.2830 and  later 1.2800. To the upside, the 1.2920/30 remains a strong resistance, and seems unlikely the  pair can move beyond it today, but rather meet selling interest there in the case of an advance.”