GBP/USD in a bearish mood as last week's selloff sees the pair struggling to recover to 1.33

  • The Sterling finds itself in a defensive pattern as market sentiment draws the GBP/USD pair down on multiple fronts.
  • GBP traders' focus will be set on Thursday's BoE rate decision with a thin calendar in the lead-up.

The GBP/USD is flat in thin Monday trading, remaining steady near 1.3270 ahead of a Monday session that is likely to see little action as markets brace for developments on Brexit and potential trade wars.

Last week's Brexit voting in the UK's House of Lords handed a solid win to Prime Minister Theresa May, however that win carries a cost: managing to keep the UK's Parliament out of the ongoing Brexit negotiation process has increased the chances of a hard Brexit scenario, which is sapping what's left of any potential bullish momentum for the Sterling.

This week is a thin schedule for the GBP on the economic calendar, and the first mentionable event this week comes on Thursday, with the Bank of England's (BoE) next rate decision. The BoE is expected remain steady on interest rates for the foreseeable future with economic figures for the UK's economy continuing to waffle on forecasts, and growth continues to stumble over roadblocks.

On the US side,  Monday is a likewise thin schedule, though traders will be keeping an eye on a couple of speeches from the US Fed's William Dudley at 12:45 GMT, FOMC Member Raphael Bostic at 17:00 GMT, and FOMC Member John Williams at 19:45 GMT.

GBP/USD levels to watch

As noted by FXStreet's own Haresh Menghani, "from a technical perspective, the pair managed to settle just above the 1.3200 handle and hence, it would be prudent to wait for a follow-through weakness before favouring any further near-term downside. A convincing break below the mentioned support is likely to accelerate the fall towards 1.3135 horizontal support before the pair eventually breaks below the 1.3100 handle and aim towards testing its next support near the 1.3075 region.

On the upside, recovery beyond the 1.3300-1.3310 immediate hurdle is likely to confront immediate resistance near mid-1.3300s, above which the pair is likely to make an attempt towards reclaiming the 1.3400 handle. Any subsequent up-move might remain capped near the 1.3425-30 supply zone ahead of this week's key event risk."

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