GBP/USD Analysis: Investors refrain from placing directional bets amid Brexit uncertainties

The GBP/USD pair had some good two-way price moves on Friday and finally settled nearly unchanged for the day, forming a Doji candlestick pattern on the daily chart. A slight improvement in the global risk sentiment undermined the US dollar's relative safe-haven status and extended some initial support to the major. The uptick, however, lacked any strong follow-through, instead met with some fresh supply near the 1.2960 region after French President Emmanuel Macron warned that the UK should prepare for a no-deal Brexit unless the UK Prime Minister Boris Johnson backs down on fishing rights. Separately, the UK Foreign Secretary Dominic Raab said that there was a Brexit trade deal to be done.

Meanwhile, the UK PM Johnson reiterated that he would seek a no-deal Brexit unless there was a fundamental change of approach from the European Union. Johnson further clarified that he is not completely walking away from negotiations, which, in turn, extended some support and assisted the pair to rebound over 50 pips from seven-day lows. The uptick extended through the Asian session on Monday as the focus now shifts to a meeting between the EU's chief negotiator Michel Barnier and his UK counterpart, David Frost.

According to media reports, Johnson's spokesman had said that talks with the EU were over and Barnier should only come to London only if he is prepared to address all the issues on the basis of a legal text in an accelerated way. Hence, the incoming Brexit-related headlines will continue to play a key role in driving the sentiment surrounding the British pound. That said, the lack of progress on a Brexit deal, along with resurgent COVID-19 cases in the UK might continue to lure bearish traders and keep a lid on any meaningful positive move for the major.

There isn't any major market-moving economic data due for release on Monday, either from the UK or the US. However, a scheduled speech by the Fed Chair Jerome Powell might influence the USD price dynamics and further assist traders to grab some meaningful opportunities.

Short-term technical outlook

From a technical perspective, the pair, so far, has been showing some resilience below a short-term ascending trend-line extending from monthly lows. However, the attempted recovery moves remain capped near 200-hour SMA. This makes it prudent to wait for a sustained move in either direction before positioning for the pair's near-term trajectory.

Meanwhile, immediate support is pegged near the 1.2900 mark and is followed by last week's swing lows, around the 1.2860 region. A convincing breakthrough the mentioned support levels will be seen as a fresh trigger for bearish traders and turn the pair vulnerable to accelerate the fall to the 1.2800 round-figure mark. Some follow-through selling should pave the way for a slide back towards challenging the very important 200-day SMA, currently near the 1.2710 region.

On the flip side, any subsequent move up might continue to confront a stiff resistance near 200-hour SMA, around the 1.2960 region. A sustained move beyond might prompt some short-covering move and lift the pair back towards the key 1.3000 psychological mark. The momentum could further get extended, though seems more likely to remain capped near the 1.3065-80 heavy supply zone.