GBP/USD analysis: bearish potential increases after a pullback to 1.3165

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3119

UK Brexit Secretary Raab's optimism hardly spooked no-deal fears.
Risk aversion gave the greenback a lift against high-yielding currencies.

The Pound recovered some of the ground lost by the end of last week, with the GBP/USD pair trading as high as 1.3166. Earlier in the day, there were some reports doing the rounds about a possible snap election in the UK as soon as November, to save PM May leadership and therefore prevent the collapse of Brexit talks. Furthermore, Brexit Secretary Raab hit the wires a couple of times through the day, with optimistic comments aimed to cool down fears rather than offering something substantially relevant. He dismissed chances of a snap election, and said that the Cabinet meeting ended after a "healthy discussion." The latest CBI Industrial Trends Survey showed that manufacturers’ output volumes growth by less-than-expected, with the index down to -1 from the previous 7. There are no macroeconomic releases scheduled in the UK for Tuesday.

The GBP/USD pair eased from the mentioned high to trade a few pips above the 1.3100 level, stalling its intraday advance around a critical resistance area, as the price was unable to recover ground above a major Fibonacci resistance, the 50% retracement of the 2016/18 rally, neither above a mild-bearish 20 SMA in the 4 hours chart. In the mentioned time frame, technical indicators retreated after an early advance within negative levels, with the Momentum heading south at fresh monthly lows and the RSI at 45, leaning the scale toward the downside.

Support levels: 1.3090 1.3055 1.3020

Resistance levels: 1.3165 1.3200 1.3245

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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