GBP/USD fails to hold above 1.31, clings to modest daily gains

• US Dollar Index recovers modestly from 2-week lows.
• UK's Hammond says no-deal Brexit is no longer an immediate threat.
• GBP/USD looks to close the week with modest gains.

The GBP/USD pair took advantage of the risk-on mood and advanced to a weekly high of 1.3132 on Friday but struggled to preserve its momentum as investors started to take their profits off the table. At the moment, the pair is up 0.23% on the day at 1.3083. On a weekly basis, the pair remains on track to close in the positive territory, adding nearly 50 pips with the British pound finally breathing a sigh of relief after the EU agreed to delay Brexit until end of October at this week's summit.

British finance minister Philip Hammond today said that with the EU granting the Brexit extension, there was no longer an immediate threat of a no-deal Brexit and added that he was expecting business investment to increase substantially once Brexit is resolved.

On a similar note, while speaking to reporters at the thirty-ninth meeting of the International Monetary and Financial Committee in Washington, the International Monetary Fund (IMF) Managing Director Christine Lagarde said that the Brexit delay averted a 'terrible outcome.' "It probably gives time for economic agents to better prepare for all options, particularly industrialists and workers, in order to try to secure their future,” Lagarde elaborated. 

Meanwhile, the greenback, which has been capitalizing on safe-haven flows lately, is having a tough time finding demand with investors staying focused on riskier assets and allowing the pair to cling to its daily gains. As of writing, the DXY is losing 0.26% on a daily basis at 96.92.

Today's data from the U.S. revealed that the consumer confidence deteriorated in April with the UoM's Consumer Confidence Index dropping to 96.9 (preliminary) from 98.4 in March.

Technical outlook by FXStreet Analyst Yohay Elam

Pound/dollar is trading in a narrowing wedge or triangle. Both uptrend support and downtrend resistance begin around the same time in early March, but downtrend resistance is much steeper. In theory, volatility should narrow as the wedge narrows and then explode. But to what direction?

Momentum leans to the downside, but the Relative Strength Index is balanced for quite some time. All in all, the technical picture is marginally dovish.

1.3030 provided support in April and is the initial support line. 1.2980 is the low point for April. 1.2960 was the low point in March and where the uptrend support line begins. 1.2895 separated ranges in mid-February. 1.2830 is next.

1.3124 capped the pair in mid-April and serves as the initial resistance line. 1.3200 is a round number and also the high point in April. The 1.3260-1.3270 area capped the pair in late March and also beforehand. 1.3315 was a stepping stone on the way down in April, and 1.3388 was the cycle high recorded in mid-March, where the downtrend resistance line begins.