GBP/USD analysis: Bulls struggle to make it through 1.2760 supply zone, ignore persistent USD selling
|- Bulls struggle to capitalize on the prevailing USD selling bias.
- No-deal Brexit fears seemed to cap any meaningful up-move.
- Tuesday’s key focus will be on speeches by FOMC members.
The US Dollar remained depressed on the first trading day of a new week amid expectations that the Fed will cut interest rates before the end of the year. The GBP/USD pair, however, failed to capitalize on the broad-based USD weakness and continued with its struggle to make it through the 1.2760 supply zone. Given that the favourite UK PM candidate Boris Johnson has cleared its stance to leave the EU on October 31, growing fears of a no-deal Brexit seemed to the only factor holding investors from placing any aggressive bullish bets and keeping a lid on any subsequent up-move.
Meanwhile, the downside remained cushioned amid the prevailing USD selling bias, though bulls are likely to wait for a sustained break through the mentioned barrier before positioning for any further near-term appreciating move. Tuesday's economic docket features the release of UK CBI Distributive Trade Survey for June, which will be followed by the Conference Board's Consumer Confidence Index, Richmond Manufacturing PMI and new home sales data from the US. This along with speeches by influential FOMC members, including the Fed Chair Jerome Powell might further collaborate towards producing some short-term trading opportunities.
From a technical perspective, nothing seems to have changed for the pair and the 1.2760 region remains a key pivotal point for the next leg of a directional move. A convincing break through the mentioned barrier might now set the stage for a strong follow-through up-move towards reclaiming the 1.2800 handle en-route the next major supply zone near the 1.2840-45 region.
Alternatively, rejection slide from the current resistance area now seems to find immediate support near the 1.2700 round figure mark, which if broken might prompt some technical selling and accelerate the slide further towards the 1.2650-40 horizontal support. A follow-through selling has the potential to continue dragging the pair further towards challenging the 1.2600 handle.
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