Pound has staged a short-term spike following the better-than-expected Q2 DGP report, but failed to sustain gains as the manufacturing and industrial production disappointed. After a brief jump to 1.2954, the cable retreated back to opening levels, however keeps above the 1.29 threshold.
Apart from the impressive GDP data, the general weaker tone around the greenback helps GBPUSD to refrain from losses, though the bearish risks from the Brexit developments are still there. In particular, it is reported that the UK PM May will hold a cabinet meeting this week to discuss no-deal Brexit as a part of preparations in case of a no-deal scenario. Chequers is the only Brexit plan on the table, which is a risk for the pound as EU negotiator Michel Barnier has said he is "strongly opposed" to aspects of the Chequers plan, and former Brexit minister Steve Baker said PM risks 'catastrophic split' in Tories.
Apart from this factor, sterling will have another test in the form of a Bank of England meeting on Thursday. Despite the central bank is not expected to change the current stance of the monetary policy, Carney’s comments on the economy and the potential further policy course could bring the additional volatility to the pound that could get back below the 20-DMA and challenge the 1.28 threshold should the bearish risks realize.