GBP/USD Forecast: 1-month old descending trend-line might continue to cap any attempted up-move

The GBP/USD pair rallied to over one-week tops on Friday, albeit continued with its struggle to sustain above the 1.3100 handle. The broad-based US Dollar weakness, amid firming expectations that the Fed will hold interest rates steady through 2019, was seen as one of the key factors benefitting/driving the pair higher. The uptick, however, lacked strong conviction and the pair finally settled around 60-pips off session tops despite the latest development, wherein the EU leaders granted the UK a second Brexit extension until Oct. 31. 

The lack of progress in cross-party talks between the UK PM Theresa May and opposition leader Corbyn, aimed to break the Brexit deadlock, held investors from placing any aggressive bullish bets kept a lid on any meaningful up-move. The downside, however, remained cushioned and the pair managed to regain some positive traction at the start of a new trading week amid persistent US Dollar selling bias, this time on the back of US-China trade optimism. 

In absence of any major market moving UK economic releases, the pair remains at the mercy of the USD price dynamics and any incoming Brexit-related headlines. Later during the early North-American session, the release of Empire State Manufacturing Index from the US and comments by external BoE MPC Member Jonathan Haskel will also be looked upon to grab some short-term trading opportunities.

From a technical perspective, attempted up-moves seem more likely to remain capped at one-month-old descending trend-line, currently near the 1.3125 region, above which a fresh bout of short-covering might assist the pair to aim towards reclaiming the 1.3200 round figure mark. On the flip side, the 1.3040-30 region, marking the lower end of a short-term ascending trend-channel extending from Dec. 2018 lows, might continue to protect the immediate downside, which if broken should pave the way for a breakthrough the key 1.30 psychological mark and expose the very important 200-day SMA support, currently near the 1.2975 region.