GBP/USD: "Bulls, enough is enough, unless you can close above 1.2957"

Eyes are on the US dollar that has just dipped below the 95 handle for the first time in this bear run and that is significant. However, while 94.80 holds, the focus should stay with the Fed's path of tightening, giving the dollar the edge. While UK data has been more positive of late, the US economy is performing better and while Brexit remains an uncertainty, the pound will remain under pressure and depending on the latest sentiment, sterling can plummet at a drop of a hat. 

Brexit noise

Analysts at Scotiabank explained that the UK/EU will hold “continuous” talks on Brexit from now on, with time running short for a deal to be reached, EU officials have indicated:

"EU negotiator Barnier sounded hopeful that common ground can be found but it is clear that discussion have made little or no progress recently and key stumbling blocks remain unresolved. Barnier conceded that talks may run on after Oct but stressed that negotiations needed to be wrapped up well before year-end."

Moreover, the analysts remain somewhat sceptical about the process and continue to feel that the pound will remain subject to Brexit disappointment in the coming months.

When are the FOMC minutes and how could they affect DXY?

• Fed Minutes and Jackson Hole Put Focus Back on Central Banks
• FOMC minutes to provide information on concerns regarding trade policy - Nomura

Looking ahead for today, the FOMC minutes are likely to underpin the longer term trajectory of the bull trend in the dollar considering the Fed's optimism about the economy and their pledges that will be reinforced in today's minutes to continue to raise rates. 

GBP/USD levels

Intraday price action suggests gains have stalled for now and the daily doji with the 21-D SMA holding up the advance may just have put a limit on how far the pound can recovery at this juncture. 

"The July low at 1.2957 should hold the initial test," analysts at Commerzbank argued, adding, "...failure here will signal further losses to the June 2017 low at 1.2590. The intraday Elliott wave counts are conflicting, a move above 1.2957 would allow for a challenge of the 1.3173 July 30 high. Minor resistance below this level comes in at the 1.3049 and 1.3102 late June lows."