GBP/USD: Recovery from 31-year lows gains traction on UK PMI

The bears appear to have faced exhaustion post-European open, allowing a minor-recovery in the GBP/USD pair back towards 1.28 handle.

GBP/USD finds support from UK construction PMI

The recovery in the GBP/USD pair from multi-decade troughs gains momentum after the UK construction PMI report surprised markets to the upside, and jumped back into expansion territory last month, offering some respite to the GBP bulls. The UK Markit/CIPS Construction PMI jumps to 52.3 in Sept vs 49.0 expectations. At the time of writing, GBP/USD recovers to 1.2785, still down -0.41% on the day.

The cable slumped to the lowest levels since 1985 at 1.2757 levels last hour, as the Brexit process-driven fears compounded after UK PM May once again reiterated today that the Brexit procedure will begin March-end 2017 and as a result the British economy may suffer a hard-landing.

Also, a broadly higher greenback on renewed prospects of a Fed rate hike this year, following yesterday’s solid US data, also collaborated to the downslide in the major.

Focus continues to remain on the Brexit-related headlines, as the spot remains heavily offered for the second straight session.

GBP/USD Levels to consider            

The pair has an immediate resistance at 1.2800 (key support-turned resistance), above which at 1.2850 (psychological levels) and next at 1.2900 (round number). On the flip side, support is seen at 1.2846 (3-month low) below that at 1.2750 (31-year lows) and at 1.2700.