GBP/USD continuing to sag as Friday's UK GDP reading looms ahead

Sterling traders are bracing for announcements regarding plans for a no-deal Brexit as negotiations go nowhere fast.
UK GDP figures due on Friday will be keeping Pound traders busy, but US jobless claims are up first.

Joshua Gibson FXStreet

The GBP/USD pair is trading into 1.2875 after seeing decline on Wednesday, falling from a high of 1.2960 as bearish sentiment continues to factor heavily into the GBP markets.

Brexit is still an ongoing concern for GBP traders, and negotiations between the UK and the European Union are set to begin anew in the coming weeks with Prime Minister Theresa May taking the reigns of talks personally. Several key Brexit ministers within the UK abandoned their posts in protest over the latest proposal tabled by PM May for being too pro-EU, and the UK's May finds herself caught between a rock and a hard place after EU leaders in Brussels flatly rejected her proposal for being too selective and asking the EU to give up too much sovereignty.

With Brexit on the frontburner and Thursday's calendar on the thin side, traders will be turning their eyes to Friday's GDP figures for the UK, with the q/q GDP for 2018's second quarter expected to improve from 0.2% to 0.4%, and the y/y figures expected to tick up slightly from 1.2% to 1.3%, though traders will be sensitive to any slumps in the data; the Bank of England (BoE) had a very dovish showing recently, with the UK's central bank set for a pace of rate hikes that is much slower and lower than many traders have been hoping for.

Before Friday's action though, the US Dollar side of the GBP/USD will be seeing Initial and Continuing Job Claims later today at 12:30 GMT; ongoing jobless claimant count is expected to tick up to 1.74 million compared to the previous reading of 1.724 million, while first-time claimants are expected to increase slightly as well, forecast to come in at 220,000 versus the previous month's 218 thousand.

GBP/USD Levels to watch

The Sterling struck a new bottom against the Greenback recently, marking out new territory near 1.2900, and as FXStreet's own Valeria Bednarik noted on the pair's technical stance heading into Thursday's London markets: "the GBP/USD pair recovered from the mentioned low to settle around 1.2900, maintaining the bearish tone intact, according to technical readings in the 4 hours chart, as it holds far below a bearish 20 SMA, capping advances now at around 1.2950 while technical indicators recovered, but barely corrected extreme oversold conditions, with the RSI currently trying to advance above its 30 level. The bearish potential could ease on a continued recovery beyond 1.2960, but renewed selling interest below 1.2850 should signal a fresh 2018 low for this Thursday."

Support levels: 1.2850 1.2810 1.2770

Resistance levels:1.2920 1.2960 1.3000

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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