- Upside appears limited amid Brexit uncertainty and US dollar pullback.
- All eyes on FOMC minutes and the first of a series of notices on how to deal with a hard Brexit.
The GBP/USD pair set off the week on a weaker note, consolidating last week’s rebound near the midpoint of the 1.27 handle, as the markets remain cautious heading into the releases of the first of a series of notices on how to deal with a hard Brexit later this week.
The pound remains undermined by the looming Brexit uncertainty, as the UK government prepares for a no Brexit deal and especially in light of weekend’s report that the UK's no Brexit deal planning will rely heavily "on the availability of existing labor" in the event that talks break down.
Further, the GBP bulls take a back seat after the latest Institute of Directors (IOD) survey showed that the UK business leaders’ confidence in the economy fell to its lowest point this year on the back of the Brexit uncertainty.
However, Cable’s downside may found some cushion amid the recent series of upbeat UK economic releases, with the inflation rate edging higher alongside a rebound in the Kingdom’s retail volumes.
Meanwhile, the immediate focus now remains on the FOMC member Bostic’s speech for fresh US dollar trades, as developments around the US-China trade talks will continue to influence the buck ahead of the FOMC minutes.
GBP/USD Technical Levels
FXStreet’s Chief Analyst, Valeria Bednarik, notes: “The daily chart shows that the pair remains bearish and oversold, as the RSI indicator posted a modest upward correction, now heading higher at around 26, while the Momentum indicator holds directionless well into negative territory, as the 20 maintains its strong downward slope some 200 pips above the current level. In the 4 hours chart, the pair settled a few pips above a mild-bearish 20 SMA, while technical indicators entered the positive territory, the Momentum still heading higher and the RSI currently at around 52, rather reflecting the bounce from the low set at 1.2661 than suggesting further gains ahead. Support levels: 1.2700 1.2665 1.2620. Resistance levels: 1.2760 1.2790 1.2825.”
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