GBP/USD gathers traction on USD weakness

After reaching its daily high at 1.2743, the GBP/USD pair started to erase its gains in the early NA session following British PM May's statements. However, the pair found support near the 1.27 handle and gained momentum in the session and is now trading at 1.2730, up 0.4% on the day.

Following the European Council meeting, Theresa May said that there were differences between their proposals and those of the EU and added that they would be publishing proposals on EU citizens in full on Monday and would try to reach an agreement as soon as possible.

On the other hand, disappointing data from the United States triggered a USD sell-off in the session, pushing the US Dollar Index below the 97 mark for the first time in three days. Both the Manufacturing and Services PMI figures released by Markit retreated, missing the market expectations, and after dropping 7.9% in April, the change in New Home Sales came in at 2.9%, lower than the consensus of 5.4%. As of writing, the DXY is at 96.90, down 0.38% on the day.

• US Dollar toying with session lows around 97.00

Technical outlook

Although the pair erased most of its weekly losses, it's still headed for a negative closing. The RSI on the 4-hour chart is inclining towards the 70 handle, suggesting that there is more room on the upside in the short-term. 1.2660 (100-DMA) could be seen as the first support ahead of 1.2580 (Fib. 50% retracement of mid-March - mid-May rise) and 1.2500 (psychological level). On the upside, resistances could be seen at 1.2775 (20-DMA), 1.2860 (50-DMA) and 1.2965 (Jun. 7 high).

• GBP/USD: Symptoms of a large rebound are still lacking - SocGen
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