GBP/USD hanging onto 1.31 ahead of US GDP figures

The Sterling fell against the Greenback as broader markets favor the USD amid reversal flows.
Brexit continues to be a problem, with the EU seeing no interest in the latest proposals from PM May.

Joshua Gibson FXStreet

The GBP/USD is trading just above the 1.3100 technical level heading into Friday's major market window after seeing steady declines from Thursday's high of 1.3212 as the US Dollar rebounds across the broader market.

The G10 FX space went USD-positive across the board for Thursday, fueled by a decision by European Central Bank (ECB) head Mario Draghi to clarify to traders that the ECB will not be moving on interest rates or making adjustments to their QE program until at least September 2019 as the ECB hopes to weather a storm of lagging economic growth. The ECB's statement fueled a rebound in the Greenback as traders fell back into the US Dollar for lack of better options.

Adding fuel to the Sterling's sell-off fire was the European Union's head Brexit negotiator Michel Barnier, who officially killed off UK Prime Minister Theresa May's latest 'third option' Brexit proposal. The UK now heads back to the drawing broad against a backdrop of uncertainty as the final cut-off date for Brexit, March of 2019, is fast approaching and little, if any, headway has been made on averting a hard-landing Brexit scenario, though progress is expected in the coming months now that PM May has formally taken over the reigns as head Brexit negotiator for the UK, leaving the UK's Brexit cabinet to worry about backup plans to help soften the landing if a hard exit scenario becomes unavoidable.

Friday offers nothing on the GBP side of the economic calendar, and traders will be focusing on the US preliminary GDP figures due at 12:30 GMT, and the headliner annualized GDP for Q2 is forecast to clock in at 4.1%, versus the previous reading of 2.0%.

GBP/USD Levels to watch

The Sterling-Dollar pairing is looking at further downside on the technical front, according to FXStreet's own Valeria Bednarik: "the pair is close to the 1.3100 figure, holding a few pips above this last ahead of the Asian opening, and looking poised to extend its decline as in the 4 hours chart, the pair broke below a now flat 20 SMA, while technical indicators have turned sharply lower, now breaking through their midlines, in line with a continued decline for this Friday, particularly on a break below 1.3090."

Support levels: 1.3090 1.3045 1.3010

Resistance levels: 1.3145 1.3190 1.3230

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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