GBP/USD consolidates below 1.29 and key resistance structure

GBP/USD is currently trading at 1.2885 and between a range of 1.2819 and 1.2978 on the day.

Brexit remains in focus and GBP has weakened on suggestions the latest round in negotiations has hit a snag. 

The EU has begun legal proceedings against the UK after the Kingdom's PM, Boris Johnson, outlined plans to breach the terms of its Brexit divorce deal with the EU and therefore break international law. 

''We had anticipated a souring of the week’s earlier tone and think GBP should continue to lag its peers near-term. Further out, however, we think sterling has a lot of bad news in the price and wonder if downside risks for cable of a No Deal outcome are starting to diminish,'' analysts at TD Securities explained.

The UK has one month to respond to the legal challenge while the negotiations continue.

''The decision by the UK to ignore international law sets a dangerous precedent, adding uncertainty to not only Brexit but also global stability. It undermines the power of the WTO,'' analysts at ANZ bank explained. 

However, both sides say a deal is in sight despite that they are struggling to reach an agreement on some key issues.

One of the major issues is around the UK's ability to use state aid in order to prop up British businesses. The EU says this could give British companies an unfair advantage over EU companies. Disputes over fishing rights and governance are also preventing headway.

Meanwhile, the US dollar was pressured to a low in the 93.50s as measured by the DXY index as investors juggled hopeful and pessimistic news on the progress of stimulus talks Washington amid signs of waning momentum of economic recovery from the pandemic recession, now entering its ninth month. 

GBP/USD levels

If there is a continuation of accumulation at support, then the case will remain bullish.

However, a break of the structure opens downside risks.  

The US dollar, on the other hand, could be on the verge of a comeback: