GBP/USD surge past 1.3000 handle

The GBP/USD pair has finally managed to break through the important 1.3000 psychological mark resistance, which triggered a bout of short-covering and boosted the pair immediately to 1.3040.

The pair got an initial boost from a lower-than-expected decline in manufacturing and production data for the month of May. According to the data released, UK manufacturing production fell 0.5% m/m in May, while total industrial output fell 0.5% m/m in May. Both the reading were well below April's strong numbers but were better-than consensus estimates. 

The pair gained further traction as the bullish momentum grabbed some stops around 1.3000 handle. The pair's near-term direction would, however, be determined based on the final outcome of next week's BOE monetary meeting on Wednesday.

Traders now turn their focus on today's ADP report and weekly jobless claims data from the US, ahead of the closely watch official monthly employment data on Friday. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "the 4 hours chart shows that the pair has stabilized below a still bearish 20 SMA, currently at 1.3070, whilst the technical indicators head modestly higher, but still within negative territory, suggesting the upside remains well-limited."

"Strong selling interest stands around 1.3000/10, and an upward acceleration through the region can see the pair extending up to 1.3060, and even up to 1.3100, although selling on spikes is the name of the game around the pair. Below 1.2930, the immediate support, the risk turns towards the downside, with chances then of a slide towards the 1.2860/80 region, en route to 1.2820."