GBP/USD analysis: Brexit concerns keep weighing the Pound

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2921

Positive headlines toward a softer Brexit keep being denied by facts.
The UK macroeconomic calendar will be quite busy this Monday, with monthly GDP data and production figures.

The GBP/USD pair soared to 1.3027 but was unable to hold on to gains, finishing the week pretty much unchanged around 1.2920. The Pound benefited from news indicating that EU´s chief negotiator, Michel Barnier, has told UK representatives that he was open to discussing alternative backstops to the withdrawal agreement. However, the GBP momentum cooled down after no further details were given on such plans, while, at the same time, Barnier was said to be disappointed by UK's Raab failure to provide data on the trade flows between the UK and Northern Ireland, information that Barnier considers critical to moving on with negotiations. Adding pressure on the pair were the US employment report, much better-than-expected and the escalation of global trade tensions. Beyond Brexit woes, the week will start with loads of UK relevant data, including monthly GDP estimates and Industrial and Manufacturing Production figures for July, seen posting modest advances.

The pair has failed multiple times in its attempts to extend gains beyond the 1.3000 level in the last month but closed the week right above the key 1.2890 region, the 61.8% retracement of the 2016/18 rally. In the daily chart, a bullish 20 DMA converges with the mentioned Fibonacci support, reinforcing it, while technical indicators turned neutral, lacking directional strength around their midlines, signaling that buying interest remains limited. Shorter term, and according to the 4 hours chart, the risk skewed to the downside, as the price is barely holding above a mild bullish 20 SMA, while technical indicators turned sharply lower, now challenging their midlines.

Support levels: 1.2890 1.2845 1.2800

Resistance levels: 1.2945 1.2980 1.3010

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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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