GBP/USD holding steady on a lackluster Monday as Brexit continues to go nowhere

Sterling sees a quiet Monday on the econ calendar, market sentiment to sit in the pilot's seat.
GDP figures due later this week will give markets a hint about whether or not the BoE should be as bullish as it has been recently.

Joshua Gibson FXStreet

The GBP/USD is trading flat ahead of a Monday that sees little relevant data for the Sterling, and traders' focus is expected to be split between overall market sentiment based on trade tensions globally, and the still-raging Brexit debate taking place closer to home.

The Sterling sprung to the bullish side in the latter half of last week's action after the Bank of England (BoE) had 3 out of its 9 voting members begin calling for a rate hike, a move that surprised markets and sent the GBP higher as traders prepare for an eventual rate hike from the BoE in the coming months. GDP figures to be released later this week on Thursday will further cement the BoE's newfound hawkish stance if the release is good, but another slump for key economic figures for the UK will see a continued decline for the Pound as the BoE gets pushed further back off of their hawkish perch.

Tempers are beginning to flair within the UK from the various Brexit stances that exist within the kingdom, and public demonstrations last week are pushing for a new vote on the terms of Brexit, while Prime Minister Theresa May continues to ignore calls for preparations for a "no deal" Brexit, insisting that she believes the UK can negotiate an acceptable withdrawal plan from EU leaders in Brussels, a play that is being met with some degree of scepticism, both from key political party members within the UK, and from Brussels.

Monday sees little action for the GBP on the economic calendar, though the USD could catch a ride if New Home Sales numbers, releasing at 14:00 GMT, deviate from the forecasts excessively, with markets expecting a reading of 666 thousand versus the previous showing of 662 thousand.

GBP/USD levels to watch

The Sterling looks set to make a continued technical recovery, and as FXStreet Chief Analyst Valeria Bednarik noted, "according to the 4 hours chart, the downside potential seems limited, as the price settled above a recovering 20 SMA, the Momentum indicator retreats from overbought readings, while the RSI indicator aims to resume its advance around 55. The low post-BOE's decision at 1.3240 is the immediate support, with a break below it increasing chances of a downward move for this Monday."

Support levels: 1.3240 1.3205 1.3170

Resistance levels: 1.3280 1.3315 1.3350

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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