GBP/USD analysis: bearish pressure eases, but upside capped by 1.2890

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2858

UK Construction PMI fell to 52.9 in August, down from 55.8 in July.
EU may introduce some changes to the Irish border backstop.

The GBP/USD pair plunged to 1.2809 its lowest since August 23, on persistent fears about a no-deal Brexit and a huge disappointment from the August Construction PMI, as the index fell to 52.9, well below the expected 55.0 and the previous 55.8. Within the Inflation Report hearings, BOE's Governor Carney said he would do whatever he can to promote a smooth Brexit, but also added that the MPC doesn't have a forecast for a no-deal Brexit scenario. The Pound bounced mid-US afternoon on the back of comments from Danuta Hubner, chair of the European Parliament's constitutional affairs committee, who stated that they were open to introduce some changes to the backstop solution so that it would be politically acceptable for the United Kingdom. The pair´s recovery, however, stalled below the key 1.2890 region, where the pair has the 61.8% retracement of the 2016/18 rally. This Wednesday, the UK Markit Services PMI will be out, foreseen at 53.9 from the previous 53.5. Meanwhile, the short-term picture for the pair is still bearish, as, in the 4 hours chart, the price remains well below a bearish 20 SMA, which crossed below the 200 EMA, while technical indicators recovered from extreme oversold readings, but remain nearby.

Support levels: 1.2845 1.2800 1.2770

Resistance levels: 1.2890 1.2920 1.2955

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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