GBP/USD consolidates modest gains, fails to rally above 1.3200

• Spot consolidates gains, remains in range.
• Carney warns about the process of Brexit.
• US tax reform: key vote expected in the House of Representatives.

The GBP/USD pair remains near daily highs, challenging the 1.3200 area. It has been moving between 1.3208 and 1.3180 during the last hours, consolidating modest gains. The pound is among the top performers.

GBP/USD eyes weekly highs

After the release of UK retail sales data, the pair gained momentum and rose to 1.3208. Then pulled back modestly and remained in the range after US data. Still, it faces important risks from Brexit negotiations and also from the political uncertainties that limit the upside.

The pound held at daily highs after Bank of England Governor Carney’s presentation. He said that there are risks of the way the UK leaves the European Union and mentioned that households are acting in response to the current wage squeeze rather than fears about the Brexit outcome.

Carney Speech: Whatever happens on Brexit, BoE will be nimble enough to control inflation

The greenback appears to be looking at the US Congress where the House is expected to vote on the tax reform bill that differs from the Senate project. Today’s data showed mixed numbers. The Philly Fed manufacturing index came in below prior surveys and initial jobless claims rose more than expected, although, continuing claims dropped to the lowest since 1973. On the positive side, industrial production and the NAHB Housing Market surprise to the upside.

US: Industrial production rose 0.9% in October, manufacturing increased 1.3

US: NAHB Housing Market Index improves to 70 in November

GBP/USD Technical levels to watch

To the upside, the immediate resistance is seen at the 1.3220-30 region (Nov 10 & 15 highs); above the pair could rise to test the next resistance at 1.3270/80 that protects the 1.3300 area

On the downside, 1.3170 is the immediate support; below that the downside could gain momentum exposing first 1.3150 and then, daily lows at 1.3130/35.