GBP/USD rises back above 1.3400, remains in range

The pound erased losses against the US dollar and recovered ground versus the euro. GBP/USD climbed back above 1.3400 and it was testing daily highs near 1.3420, marginally below yesterday’s close. 

The pair rebounded after bottoming at 1.3348. It reached 1.3425 on the back of a slide of the greenback across the board. Cable continues to consolidate and remains within yesterday’s range. 

Range persist despite UK and US data 

On European hours, the pound dropped modestly after a negative revision of UK Q2 GDP growth. The slide was limited. Economic reports from the US were mixed. Personal income and spending rose in August in line with expectations 0.2% and 0.1% respectively. But the inflation indicator (PCE) came in below expectations, easing market odds of another Fed rate hike in December. 

UK Q2 2017 final GDP at 0.3% q/q

The Chicago PMI offered a minor boost to the US dollar after showing a big jump to 65.2 from 58.9 (above the 58.5 expected).The last report was September Consumer Confidence from the University of Michigan that showed a reading of 95.1 from the preliminary 95.3. 

At the Bank of England, governor Carney mentioned that tailwinds for inflation are likely to persist for a while. GBP/USD continued to trade sideways despite the data and Carney. 

BoE's Carney: Tailwinds for inflation likely to persist for a while

Levels to watch 

The pair is consolidating near weekly lows. The recent slide was capped around 1.3450 that has become a relevant support area: a break could trigger an extension of the bearish correction with potential targets at 1.3315 and 1.3260. 

On the upside, the pair is facing resistance at 1.3425, above, the key level to watch is the 1.3460/70 zone: a move on top of that area would improve the technical outlook for the pound.