GBP/USD close to the 1.31 barrier with a thin Tuesday on the docket

GBP/USD on a bearish note after Monday's Brexit headlines gave markets little good news.
A thin calendar for Tuesday sees market sentiment once again in control of the major pair.

Joshua Gibson FXStreet

The GBP/USD pairing is trading near 1.3130 ahead of Tuesday's London market session after a day of declines on Monday.

The Sterling saw little in the way of support to open the week with Brexit headlines once again dragging the GBP lower. Odds of a favorable agreement with EU leaders in Brussels are beginning to look slim, and Prime Minister Theresa May is increasingly caught between a rock and a hard place as EU negotiators continue to show no interest in making concessions for the UK to cherry-pick when and where it gets to remain in EU trade agreements, and hard-line Brexiteers within the UK's parliament continue to show no interest in making concessions in their demands for a complete exit from the EU trade mechanisms. Business leaders continue to face growing fears from the lack of clarity on what the business landscape will look like post-Brexit, and PM May's statements on Monday that she wants to see a customs union relationship maintained with the EU until 2020 did little to assuage market concerns, as the PM's explanations continue to look thin on specific details of how she'll make it work.

Positive data also couldn't support the GBP, with Monday's Markit Manufacturing PMI printing at 54.4 versus the expected 54.0, and Tuesday brings the June Construction PMI at 08:30 GMT, though with markets forecasting a decline from 52.5 to 52.0, it's looking unlikely that the GBP/USD will catch a break on the data, unless the figure prints significantly higher than the expectation.

GBP/USD levels to watch

The Sterling finds itself in a bearish pattern that's beginning to gather strength, and as FXStreet Chief Analyst Valeria Bednarik noted, "the pair fell below the 50% retracement of its latest bullish run, and the 4 hours chart shows that is now finding sellers around a bearish 20 SMA, a few pips above the Fibonacci level, making of the 1.3140 area the immediate resistance. Technical indicators in the mentioned chart have retreated, turning flat in the US afternoon, with the Momentum still above its 100 level but the RSI at around 40, leaning the scale toward the downside."

Support levels: 1.3095 1.3050 1.3010

Resistance levels: 1.3140 1.3185 1.3220

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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