GBP/USD in search of a firm direction; stuck in a familiar trading range

The GBP/USD pair extended its sideways consolidative price action through the Asian session on Monday and remained well within a broader trading range held over the past one week or so.
 
A combination of diverging factors failed to provide any meaningful impetus to the major and led to subdued trading at the start of a new week. The British Pound remained on the defensive in the wake of Friday's report that the European parliament president has rejected the UK PM Boris Johnson's new Brexit proposal.

Weaker USD lend support, Brexit uncertainties cap gains

The downside, however, remained cushioned, at least for the time being, amid a mildly weaker tone surrounding the US Dollar, weighed down by firming market expectations that the Fed will cut interest rates again at its upcoming monetary policy meeting on October 29-30 in order to support the economy.
 
A string of soft US economic data last week raised doubts on the assumption that the US economy will be more resilient than other economies and forced investors to start pricing in further monetary easing by the Fed. The same was evident from the recent slump in the US Treasury bond yields, which undermined the USD demand.
 
However, the fact that the UK PM Boris Johnson remains firm to take Britain out of the European Union on October 31, with or without a deal, held investors from placing any aggressive bullish bet and might keep a lid on any attempted positive move for the major amid absent relevant market moving economic releases.
 
In the latest Brexit-related development, The Telegraph reported that Boris Johnson would veto the EU’s seven-year budget and send a Eurosceptic commissioner to Brussels to “disrupt” the bloc’s workings if he were forced into a Brexit delay. Senior Government figures are considering a series of proposals to “sabotage” the EU’s structures if Brussels refuses to agree with a new deal or let Mr Johnson deliver Brexit without one.
 
Meanwhile, Johnson has urged French President Emanuel Macron on Sunday to "push forward" to secure a Brexit deal and told him that Britain will leave the European Union without a deal on Oct. 31 if the European Union (EU) does not show a willingness to compromise.
 
Hence, it will be prudent to wait for a sustained breakthrough the recent trading range before traders start positioning for the pair's next leg of a directional move. In the meantime, a scheduled speech the Fed Chair Jerome Powell will now be eyed for some short-term trading impetus later during the US session on Monday.

Technical levels to watch