GBP/USD: Bears eye 1.2900 on N. Korea-led risk-off, UK PMI ahead

The GBP/USD pair remained confined in a 20-pips narrow range in the Asian session, with the risk tilting towards the downside, in the wake of the latest North Korean nuke tests, while attention shifts towards the UK construction PMI report for fresh impetus.

GBP/USD: 1.3000 still on sight?

The spot is seen defending a minor bid heading towards the early European trading, flirting with session lows of 1.2952, as the latest North Korea hydrogen bomb explosion continues to spook market sentiment and weighs negatively on the risk currency GBP.

The retreat from two-week tops remains restricted amid ongoing broad based US dollar weakness, sparked by downbeat US jobs data released last Friday, which dampened hopes of a Dec Fed rate hike.

Also, expectations of a solid UK construction PMI report due to be released later today, especially after the robust UK manufacturing PMI data release, keeps the sentiment somewhat buoyed.

However, the European traders could react negatively to the North Korean news and sell-off risk assets, which could take the pair back towards 1.29 handle, in the wake of a renewed risk-aversion wave that could grip the European markets.

GBP/USD levels to consider             

Valeria Bednarik, Chief Analyst at FXStreet, explains,  “In the 4 hours chart, the technical outlook is quite alike, with the price above horizontals 20 SMA and 200 EMA, both within a well-limited range, and technical indicators heading nowhere within positive territory. The 50% retracement of the mentioned decline stands around 1.3030, a probable bullish target in the case of a Pound's rally. Support levels: 1.2910 1.2875 1.2830 Resistance levels: 1.2965 1.2995 1.3030.”