Volatility is likely to be a key feature in US trading on Friday with the US GDP data and position adjustment both important factors. GBP/USD is liable to hit further selling interest on any approach to the 1.3160/80 area.

Ramsden was appointed as a Bank of England Deputy Governor and will have a vote on the Monetary Policy Committee from September with expectations that he would be a broadly dovish member given his role as Treasury advisor, limiting the potential for higher interest rates.

Markets also priced in only a 10% chance of policy tightening at next week’s policy meeting which tended to undermine Sterling support.

US June headline durable goods orders rose a strong 6.5%, although the total was boosted by a sharp increase in aircraft orders and the increase in underlying orders was held at 0.2%. Jobless claims increased to 244,000 in the latest week from 234,000 the previous week, although the overall labour market remained very firm.

Stronger than expected wholesale inventories and exports data also boosted optimism Surrounding Friday’s second-quarter GDP release which helped underpin the dollar.

The data did not, however, trigger a major reassessment of US economic outlook with the dollar dependent on short covering and a reversal from over-sold conditions to gain ground.

There was further uncertainty surrounding the Brexit talks with some speculation that the next phase of talks could be delayed. There were, however, comments from Chancellor Hammond that he wanted companies to have 2-year access to the single market after the EU exit and a further 2-year implementation phase.

There was an underlying shift in sentiment towards expecting transitional arrangements which supported Sterling. There was, however, renewed uncertainty surrounding freedom of movement after the EU exit which could undermine investment.

Concerns surrounding the consumer outlook were fuelled by a decline in consumer confidence to a 4-year low according to the latest data.

EUR/GBP dipped to 1-week lows below 0.8900 which helped propel GBP/USD to 1.3150 before a sharp retreat as EUR/GBP recovered ground.

Overall, GBP/USD found support close to 1.3050 before correcting to the 1.3080 area on Friday.

GBP/USD 4-Hour Chart

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