GBP/USD plummets to 1.1450 area following upbeat US data

• The pound gives away gains and dives to session lows at 1.1450.
• Bright US data dampens hopes of a Fed pivot in December.
• GBP/USD: Breach of 1.1440 will negate the positive bias – UOB.

The pound has lost nearly 100 pips in a matter of minutes, following the release of a set of positive US macroeconomic indicators. The pair has dropped from levels near 1.1550, giving away all the ground taken during Tuesday’s Asian and European trading sessions, to hit lows at 1.1455.

US data gives leeway for more aggressive Fed tightening

A series of better-than-expected macroeconomic releases have boosted confidence in the momentum of US economy, easing concerns of a potential slowdown triggered by previous disappointing releases and clearing the path for the Federal Reserve to extend its aggressive tightening path beyond November. This has sent the greenback and US treasury bonds surging.

Business activity in the manufacturing sector has beaten expectations in October. The US S&P Global Manufacturing PMI improved to 50.4 in October, against market expectations of 49.9 and the ISM Manufacturing PMI confirmed the positive news, posting a 50.2 reading against the 50 anticipated by the market consensus.

Beyond that, the JOLTS job openings have displayed the strength of the US labor market, despite the Fed's efforts to cool it off. JOLTS job vacancies increased to 10.7 million in September, up from 12.2 million in August, and against market expectations of a decline to 10 M.

GBP/USD: A reversal below 1.1440 would negate the positive bias – UOB

FX analysts at UOB maintain a positive outlook on the pair as long as the 1.1440 level is not breached: “We continue to hold a positive GBP view for now and only a break of 1.1440 (no change in ‘strong support’ level from last Friday) would indicate that GBP is not advancing further. That said, as upward momentum has waned, the odds of GBP advancing to the major resistance at 1.1760 have diminished.”

Technical levels to watch