GBP/USD rises towards 1.28 handle after dismal confidence data

After fading a spike to 1.2797, the GBP/USD pair caught some fresh bids in the NA session as the weak consumer confidence data triggered a USD sell-off. Following the data, the pair refreshed its two-day high at 1.2800 and is now trading at 1.2790, up 0.25% on the day.

Today's data from the University of Michigan showed that the Consumer Sentiment Index eased to 94.5 from 97.1, its lowest level since Donald Trump's election victory. Commenting on today's data, Surveys of Consumers chief economist, Richard Curtin said that even with the expected bounce back in spending in the current quarter, personal consumption is expected to advance by 2.3% for all of 2017, consumers have become less optimistic about the future course of the domestic economy. Moreover, the cable received some interest from the investors after recent news suggested that a deal between the DUP and Conservatives could be reached at the start of the next week.

• UoM: Early June drop of 2.6 points in Sentiment Index masks much larger decline since June 8th

The US Dollar Index, which has been moving sideways near mid-97s since Thursday's European session fell to a new session low at 97.12 after data and is now at 97.16, down 0.35% on the day. Before the markets wrap up the week, FOMC member Kaplan will cross the wires at 16:45 GMT.

Technical outlook

With a daily close above 1.2800 (psychological level), the pair could aim for 1.2820 (20-DMA) and 1.2875 (50-DMA) in the short-term. On the downside, supports align at 1.2690 (Fib. 38.2% retracement of mid-March - mid-May rise), 1.2580 (Fib. 50%) and 1.2480 (Fib. 61.8%). 

• GBP/USD bearish below 1.2860 – Commerzbank
• GBP/USD bearish near-term – UOB