GBP/USD Forecast: Holding around 1.2900, bullish momentum receding

GBP/USD Current price: 1.2888

• Encouraging UK employment data kept the Pound near weekly highs.
• The House of Commons voted in favor of the Internal Market Bill.
• GBP/USD holds on to gains although the risk remains skewed to the downside.

The GBP/USD pair is holding on t gains as Tuesday comes to an end, trading in the 1.2900 price zone. The pair reached an intraday high of 1.2926, underpinned by upbeat UK employment-related data. According to the official report, the ILO unemployment rate rose to 4.1% in the three months to July as expected, although average hourly earnings in the same period beat expectations, up by 0.2% excluding bonus. Also, the number of people out of work in August was 73.7K, below the 100K expected.

On Monday, the House of Commons debated the Internal Market Bill, which was finally backed by MPs and has been moved to the upper chamber, the House of Lords. UK PM Johnson said that the bill would give the UK a "more real possibility" of a trade deal with the EU. The bill overrides parts of the Withdrawal Agreement, particularly related to how borders will be handled in Ireland.

This Wednesday, the UK will publish August inflation figures. The annual CPI is foreseen unchanged, down from 1% in the previous month. Core annual inflation is expected to have contracted to 0.6% from 1.8% previously.

GBP/USD short-term technical outlook

The GBP/USD pair holds on to its latest gains, but far from trimming the Brexit-related losses from last week. In the 4-hour chart, the pair has advanced above a bearish 20 SMA but holds below the 100 and 200 SMA which stands in the 1.3120/30 price zone. Technical indicators, in the meantime, remain within positive levels, turning marginally lower, suggesting that buying interest is limited.

Support levels: 1.2860 1.2810 1.2760  

Resistance levels: 1.2920 1.2965 1.3000

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