GBP/USD drops back to 1.2900 on EU-Brexit directives

Having bottomed out at key support of 1.2885 levels, the GBP/USD pair staged a solid comeback and tested 1.2940 levels post-European open, before dropping back to 1.29 handle, as markets turned a blind eye to a solid UK construction PMI report.

The spot remained little changed around 1.2930 levels, after the UK construction PMI data surprised markets to the upside. The final Purchasing Managers' Index (PMI) in the UK rose unexpectedly to 53.1 points in April, after having booked 52.2 points in March. Markets had predicted a 52.0 reading.

Soon after, the pound met fresh supply on the EU-Brexit directives delivered by the EU’s Chief Brexit Negotiator Barnier, citing that Brexit will have legal and human consequences. The major continues to meander just ahead of 1.29 handle, as markets digest the latest comments from Barnier.

Moving on, next of note for cable remains the US ADP jobs, ISM services PMI reports and Fed verdict, which will provide fresh momentum on the prices.

GBP/USD Levels to consider            

A break above 1.2955 (May 1 high) could lift the pair above 1.2970 (7-month tops), beyond which a test of 1.3000 (psychological levels) is imminent. Conversely, a break below 1.2900 (round figure), leading to a subsequent break below 1.2885/84/83 (daily low/ Apr 28 low/ 10-DMA) is likely to drag the pair towards testing its next support near 1.2832 (classic S2/ Fib S3).