GBP/USD analysis: Pound bounces on surprise support to May's plan

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3143

UK employment data overshadowed by Brexit woes.
GBP/USD bounced after nearing 1.3100 as Commons voted against amendment NC18 to the trade bill.

The Pound shed over 100 pips against the greenback, undermined by early negative Brexit headlines, as the D-day approaches with no light at the end of the tunnel. UK PM May was expected to be defeated in the House of Commons, as Labours said they would back an amendment from Tories, that would force the UK to join the Union's customs if no trade deal is reached by January 2019. The amendment was rejected at the last minute, resulting in the pair bouncing some 40 pips from its daily low. Also in the wires, Brexit campaigners were formally charged for dodging spending limits and the Vote Leave group was fined £61,000 and referred to the police by the Electoral Commission. Eurosceptic conservatives also won an amendment in which the government is forced to drop the idea of collect tariffs on behalf of the EU unless EU member states agree to do so in reverse. UK employment figures failed to impress, as the ILO unemployment rate remained steady at 4.2% for the three months to May as expected, while wages' growth matched market's expectations. This Wednesday, the UK will release its June inflation data, with the core yearly inflation seen up 2.2% after printing 2.1% a month earlier. The 4 hours chart for the pair shows that, despite the latest bounce, the bearish momentum remains strong ahead of the Asian opening, with technical indicators flipping into the red almost vertically after the price broke with a huge volume candle through its 20 SMA. The decline is set to extend on a break below 1.3100, as the pair bottomed at 1.3102 last week and at 1.3106 this Tuesday, with the pair then probably approaching the key 1.3000 threshold.

Support levels: 1.3100 1.3065 1.3030

Resistance levels: 1.3155 1.3190 1.3240

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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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