The GBP/USD pair held within a limited trading over the past one week and remained capped below the key 1.30 psychological mark amid uncertainty surrounding Brexit talks. The pair even failed to benefit from a modest US Dollar weakness led by Friday's weaker-than-expected US monthly jobs report. Immediate greenback slump turned out to be short-lived as market participants seemed convinced that the weaker reading was not weak enough to hold the Fed from raising interest rates further in 2017 and start unwinding its massive $4.5 trillion balance sheet. The closely watched ISM manufacturing PMI, which jumped to a six-year high in August also underpinned the buck on Friday and contributed towards keeping a lid on the pair's up-move.
The major now seems to have entered a consolidation phase around mid-1.2900s as investors seemed refraining from placing aggressive bets amid renewed geopolitical tensions after N. Korea tested a hydrogen bomb during the weekend. On the economic data front, the release of construction PMI from the UK would now be looked upon for some short-term trading impetus during European session on Monday. The US markets would remain closed in observance of Labor Day holiday and hence, the pair seems unlikely to break through its recent trading range.
From a technical perspective, the pair has failed to indicate any directional bias and seems more likely to extend its range bound price action. Hence, traders are likely to wait for a decisive break through the recent trading range before committing to the pair's near-term trajectory.
On the upside, sustained momentum above the 1.30 handle, leading to a subsequent break through 1.3030-35 resistance area, is likely boost the pair towards the 1.3100 round figure mark en-route 1.3150-55 horizontal resistance. The up-move could further get extended even beyond the 1.3200 mark towards August daily closing highs resistance near the 1.3220-25 region.
Alternatively, weakness back below the 1.2900 handle might continue to find some support near mid-1.2800s. Any subsequent drop is more likely to be limited and should find some strong buying interest near a short-term ascending trend-line support near the 1.2820-1.2810 region. Only a decisive break below the trend-line support would pave way for extension of the pair's near-term weakening trend.
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