GBP/USD Forecast: Irish backstop stalemate to keep the British Pound depressed

The GBP/USD pair failed to capitalize on the post-FOMC rebound and dropped to fresh weekly lows to retest the critical 200-day SMA support on Friday. Against the backdrop of the stalemate situation over the Irish backstop issue, the disappointing release of UK manufacturing PMI kept exerting some downward pressure on the British Pound. The downside, however, remained limited and found some support at lower levels following the release of mixed US monthly jobs report. 

The headline NFP print showed that the US economy added 304K new jobs in January, albeit was largely offset by an unexpected rise in the unemployment rate and more importantly, tepid wage growth. The data reinforced a dovish Fed message at the first monetary policy update of the year and failed to provide any meaningful lift to the greenback. Meanwhile, a solid US ISM manufacturing PMI provided a much-needed respite to the USD and kept a lid on the pair's attempted bounce. 

Moving ahead, today's release of UK construction PMI seems will now be looked upon for short-term trading opportunities. Investors this week will also look forward to the latest BoE monetary policy update, though is unlikely to prove to be a game changer, and remarks by a slew of FOMC members for some fresh impetus. With the UK lawmakers still far from striking a deal, growing uncertainty over Britain's exit from the European Union on March 29 might continue to keep the Sterling depressed in the near-term.

Meanwhile, the short-term technical picture has been gradually losing bullish traction and now seemed to favour a subdued/range-bound price action. However, a sustained weakness below mid-1.3000s might prompt some aggressive long-unwinding trade and accelerate the slide towards challenging the key 1.30 psychological mark. The downfall could get extended, albeit further downside seems more likely to be limited till the descending trend-line resistance break-point, now turned support, around mid-1.2900s.

On the flip side, the 1.3100 handle now becomes immediate resistance and is closely followed by the 1.3135 region, a resistance marked by a short-term descending trend-channel formation on the 1-hourly chart. A sustained move beyond the mentioned barrier might assist the pair to make a fresh attempt towards reclaiming the 1.3200 handle. A follow-through buying will reinforce the near-term bullish bias and set the stage for an extension of the pair's near-term positive momentum towards testing the 1.3275 horizontal resistance en-route the 1.3300 handle.