GBP/USD lacking the momentum to recover to 1.34

Sterling remains trapped in recent lows as parliamentary Brexit voting outcomes revive the potential for a hard Brexit.
BoE's next inflation move already projected to remain flat.

Joshua Gibson FXStreet

The GBP/USD is flat for Monday, sifting just beneath Friday's close near 1.3270.

The first half of this week is shaping up to be a quiet affair for the Sterling, with little of note on the economic calendar until the Bank of England's (BoE) next rate decision due on Thursday; The BoE is widely expected to stand pat on rates for now, and previous market expectations for a rate hike sometime in the fourth quarter are looking far-fetched as economic data for the UK resumes missing expectations. This Thursday is widely expected to see the BoE remain on hold and keep the interest rate at 0.5%.

Prime Minister Theresa May largely won in the House of Lords last week, achieving the desired outcome from a series of votes on key Brexit topics, and has managed to keep parliamentary hard-line Brexiteers out of ongoing negotiations with EU leadership in Brussels, though the PM's wins on Brexit are a double-edged sword for the UK to fall on: failure to secure suitable trade deals with the EU is more likely to see a hard-Brexit scenario unfold.

GBP/USD levels to watch

The Sterling has slumped away from a technical correction this month, and as FXStreet's own Valeria Bednarik noted on the GBP/USD's technical outlook: "the downside is favored as in the daily chart, the pair settled below a now bearish 20 DMA at 1.3345, while the RSI hovers near oversold reading. The Momentum indicator, however, remains flat around its 100 level, as the pair held above the bottom of its previous 3-week range. In the 4 hours chart, the bearish potential is stronger, as the pair ended well below bearish moving averages, while technical indicators resumed their declines after the recovery of oversold readings stalled short of their midlines."

Support levels: 1.3250 1.3210 1.3170

Resistance levels: 1.3300 1.3345 1.3390

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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