GBP/USD analysis: Brexit jitters dominate Pound

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3148

The UK monthly employment data will be out this Tuesday.
GBP/USD trimmed early losses but was unable to surpass a strong static resistance area at 1.3170.

The GBP/USD gapped lower at the weekly opening, falling as low as 1.3084, on news indicating that no progress was made on weekend talks which ended without a solution to the Irish border issue. The Sterling slowly ground higher from such low, accelerating its recovery after London's opening, with the pair reaching a daily high of 1.3181 before finally retreating. Brexit made it to the headlines all through the day, with Brexit Secretary Raab and PM May speaking before the House of Commons, but adding no new hopes for a deal. EU's Tusk sent an invitation letter to EU governments ahead of Wednesday's summit, which cooled further down hopes as he said that Brexit is "more complicated than expected" and adding that a no-deal is more likely than never before. The UK will release its monthly employment data this Tuesday, with the ILO unemployment rate for the 3 months to August seen steady at 4% and average earnings seen rising modestly. Brexit, however, will likely keep overshadowing data.

The pair was unable to hold on to gains above the 1.3170 Fibonacci resistance, and maintains a negative tone ahead of the Asian opening, trading around Friday's close. In the 4 hours chart, a mild bearish 20 SMA capped the upside, while technical indicators have retreated from their midlines, now heading nowhere but within negative ground. Much of the upcoming direction, however, will be more linked to Brexit headlines than to technical readings, with chances of a bullish breakout on renewed hopes pushing the pair to retest the recent high in the 1.3245 price zone.

Support levels: 1.3130 1.3095 1.3050

Resistance levels: 1.3170 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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