GBP/USD Forecast: Descending trend-channel capping gains, Carney/UK jobs data in focus

Haresh Menghani FXStreet

The GBP/USD pair built on Friday's goodish rebound from the 1.3100 neighborhood and continued gaining positive traction at the start of a new trading week. The up-move, however, fizzled out just ahead of the 1.3300 handle and the pair finally ended nearly unchanged for the day. Meanwhile, the prevalent US Dollar selling bias, largely unaffected by Monday's upbeat US economic data, did little to lend any support, with the recent UK political developments turning out to be an exclusive driver of the pair's near-term momentum.

The resignation of UK defence Minister Guto Bebb added to the recent slew of departures of pro-Brexit lawmakers and prompted some fresh weakness around the British Pound. Debate on the Brexit Trade Bill will continue on Tuesday in the House of Commons and any fresh developments might trigger some volatility around the GBP crosses.

Apart from the Brexit headlines, investors on Tuesday will closely scrutinize the BoE Governor Mark Carney and Deputy Governor Jon Cunliffe's testimony on the Financial Stability Report before the Treasury Select Committee. This coupled with the latest UK employment details, especially average earnings data, will play an important role in influencing the pair's next leg of directional move.

Technically, the pair on Monday faced rejection at a short-term descending trend-channel resistance and the same would be confirmed on a subsequent break below the 1.3200 handle. Sustained weakness below the mentioned support has the potential to drag the pair back towards 1.3140-35 support area en-route the 1.3100 round figure mark.

Alternatively, a convincing breakthrough the trend-channel resistance would mark a fresh bullish breakout and lift the pair back towards 1.3360-65 supply zone, near three-week tops set last week. A follow-through buying now seems to pave the way for an extension of the positive momentum, even beyond the 1.3400 handle, towards its next major hurdle near the 1.3435-40 region.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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