GBP/USD Forecast: Has room to rise while this (temporary?) calm continues

• GBP/USD has been trading in a narrow range amid a calmer market mood.
• The ongoing Brexit impasse is weighing on the pound.
• Thursday's technical chart is showing the pair holds onto the uptrend channel.

Can cable traders finally enjoy the summer or is this the calm before the next storm? Trade tensions have somewhat waned and while the Brexit clock is ticking – there is nothing to move markets – for now.

Starting with the trade war that has rattled markets, today's market mood is decidedly calmer. China has fixed the yuan reference rate at a lower level with USD/CNY topping 7.00 – but maintained restraint and has prevented its currency from falling fast. The move by the second-largest economy is helping stocks recover and money flow out of safe-haven bonds. Wednesday's rush to bonds and the resulting fall in yields has sparked worries of a recession. 

It is essential to note that US-Sino relations are far from being resolved, with uncertainties about tariffs, currency rates, and technology. A tweet from US President Donald Trump, a promise to retaliate from Beijing, or any other move may re-intensify relations once again. The two economic giants are still set to meet in September in Washington for high-level trade talks. 

More: China’s Yuan Problems

UK Foreign Secretary Dominic Raab has visited the American capital and has received support for a US-UK trade deal following Britain's exit from the EU. Raab – an outspoken Brexit hardliner – has blamed the EU for the current impasse. The Irish backstop is the center of controversy. The government has reiterated its position that it will leave the bloc by October 31st – deal or no-deal.

Dominic Cummings – PM Boris Johnson's special adviser – has hinted that the government may move forward in bypassing parliament to ram through a no-deal Brexit. There are reports of a rebellion within the pro-Remain ranks of the Conservative Party and a possibility of joining hands with the opposition parties to block such a move. Speculation about an emergency national unity government has also risen – but seems unlikely for now.

The UK releases its quarterly GDP report on Friday, and it is expected to show stagnation. 

See UK GDP Preview: Recession headlines could send GBP/USD to new lows – Three scenarios

GBP/USD Technical Analysis

GBP/USD is trading in an uptrend channel that has accompanied since the beginning of August. At the time of writing, cable is closer to uptrend support. In its recent sideways trading, GBP/USD has moved above the 50 Simple Moving Average on the four-hour chart. Momentum is positive but remains weak.

All in all, the picture is marginally bullish. 

Resistance awaits at 1.2210, which has capped the pair earlier this week. Further up, 1.2250 was the post-crash recovery high. Next, we find 1.2380 and 1.2420, both predating last week's downfall.

Support awaits at 1.2130, which provided support earlier this week. It is followed by 1.2075 – the 2019 low. Next, 1.1195 and 1.1866 await GBP/USD.