The GBP/USD pair held on to last week's hawkish BoE MPC vote led recovery gains but lacked any strong follow through momentum in wake of the disastrous UK snap election result. However, with the UK PM Theresa May entering Brexit negotiation in a much weaker positions, decreasing odds of a 'hard Brexit' might continue to lend some support to the British Pound and limited any immediate sharp downslide.
Moreover, with short-term technical indicators oscillating in neutral territory, the pair seems more likely to extend its range-bound price-action within 100-pips broader trading range between the 1.2700 and the 1.2800 handles. Hence, if would be prudent to wait for a decisive break through the said trading range before committing to the pair’s next leg of directional move.
From current levels, 1.2800-1.2820 region might continue to act as immediate strong resistance, which if conquered has the potential to lift the pair towards 1.2885 resistance area marking 23.6% Fibonacci retracement level of 1.2478-1.3048 upswing. Momentum beyond the said resistance could further get extended beyond the 1.2900 handle towards its next major resistance near 1.2955-60 area.
On the flip side, the 1.2700 handle, also nearing 50% Fibonacci retracement level, might continue to protect immediate downside, below which the pair is likely to turn vulnerable to head back towards retesting an important confluence support near 1.2630-25 region, comprising of 100-day SMA and 61.8% Fibonacci retracement level. A convincing break through this important support would confirm a fresh bearish breakdown and pave way for continuation of the pair’s corrective slide from yearly tops touched in May.
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