GBP/USD Forecast: Holding above 1.3100 but lacking strength

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.3103

Brexit is happening, market waiting for clues on future UK-EU relationship.
UK preliminary January Markit PMI seen improving modestly from December figures.
GBP/USD meeting sellers around 1.3150 a critical Fibonacci resistance level.

The GBP/USD pair ended the day with modest losses, settling around the 1.3100 figure. The UK didn’t release macroeconomic data, with the market’s focus now on the BOE’s meeting next week, amid increased odds for a rate cut. In the Brexit front, the UK has finally passed the legislation needed to make it happen. The upcoming week, the European Parliament is expected to give its approval. Market concerns are now on whether the UK and the EU can get to an agreement on their future relationship before the year-end. EU Economic Commissioner, Paolo Gentiloni, said that the EU is ready to seal a deal, as long as there’s a levelled playing field.

This Friday, Markit will release the preliminary estimate of the January Manufacturing PMI, foreseen at 48.9 from the previous 47.5 and the Services PMI for the same period, expected at 51 from 50 in December.

GBP/USD short-term technical outlook

The GBP/USD pair failed to extend gains beyond the 38.2% retracement of its late December slump at around 1.3150, where the pair topped this week. The 4-hour chart shows multiple failed attempts around the Fibonacci resistance, although it also shows that the pair is still developing above all of its moving averages. These lasts, however, are confined to a tight range, reflecting the absence of a clear trend. Technical indicators eased, but hold within positive levels, suggesting limited selling interest at the time being.

Support levels: 1.3080 1.3040 1.3000

Resistance levels: 1.3150 1.3185 1.3215

View Live Chart for the GBP/USD

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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