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


  • The British Pound remains on the defensive amid persistent Brexit uncertainties.
  • Fed rate cut speculations weighed on the USD and helped limit the downside.

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

GBP/USD

Overview
Today last price 1.2323
Today Daily Change -0.0011
Today Daily Change % -0.09
Today daily open 1.2334
 
Trends
Daily SMA20 1.2385
Daily SMA50 1.2252
Daily SMA100 1.2429
Daily SMA200 1.2723
 
Levels
Previous Daily High 1.2357
Previous Daily Low 1.2276
Previous Weekly High 1.2414
Previous Weekly Low 1.2205
Previous Monthly High 1.2583
Previous Monthly Low 1.1958
Daily Fibonacci 38.2% 1.2326
Daily Fibonacci 61.8% 1.2307
Daily Pivot Point S1 1.2288
Daily Pivot Point S2 1.2241
Daily Pivot Point S3 1.2207
Daily Pivot Point R1 1.2369
Daily Pivot Point R2 1.2403
Daily Pivot Point R3 1.245

 

 

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