GBP/USD holding near 1.27 as Brexit returns to the forefront

The GBP/USD is seeing cautious play just above 1.2700 as the Cable continues to lift from the week's low of 1.2660, but Brexit concerns continue to hang over all other issues for the UK, and continued failure to see an aversion of a hard Brexit scenario will see confidence in the GBP evaporate once again.

Retail Sales came in better than expected yesterday, clocking in at 3.5% for the year into June, but the mid-week's showing of inflation which saw the UK's CPI barely claw its way to the market's forecast of 2.5%, and the positive showing from Retail Sales has seen limited effect, and the GBP/USD heads into Friday's London market session with overall market sentiment firmly in the driver's seat and traders' attention focused on Brexit, which sees hard-line Brexiteers in Britian's parliament threatening to outright reject any trade deal brought by the Chequers, essentially promising to sabotage Brexit preparations and forcing the UK into a hard Brexit if Prime Minister Theresa May can't secure a workable deal from European Leaders when Brexit negotiations begin anew this month.

GBP/USD levels to watch

A failure by GBP bulls to force a meaningful recovery above key technical indicators is leaving the GBP/USD stuck in a still-bearish market stance, according to FXStreet's own Valeria Bednarik: "the short-term picture for the GBP/USD pair is neutral-to-bearish, as it was unable to advance beyond its 20 SMA in the 4 hours chart, while technical indicators keep hovering within negative levels, lacking clear directional strength. The yearly low, achieved this week at 1.2661 is the key support that could be challenged with negative Brexit headlines, opening doors for a continued decline toward the 1.2500 region for the upcoming weeks."

Support levels: 1.2665 1.2620 1.2575                                                                                       

Resistance levels: 1.2735 1.2760 1.2795