GBP/USD on the chopping block as Brexit gap widens

The GBP/USD major pairing is near 1.2900 ahead of Monday's London market session as the Pound struggles to close the week's opening bearish gap from 1.2956, and rising Brexit tensions over the weekend see the Sterling in rough shape for the new week.

The European Union's lead Brexit negotiator Michel Barnier reversed recent goodwill rhetoric on the weekend, reminding broader markets that the EU is flat-out against the UK's latest Brexit proposal, and UK Prime Minister Theresa May was quick to fire back with shots of her own as both sides look set to double down on their stances as the clock slowly runs out of time in the run-up to the final Brexit deadline of March 2019.

Monday's economic calendar also sees a moderate showing for the Sterling, with the Markit Manufacturing PMI due at 08:30 GMT and forecast to come in at 55 (previous 54), while the BRC Like-For-Like Retail Sales for the year into August, due later on at 23:01, is unlikely to drive much confidence as the indicator is forecast to tick lower from 0.5% to just 0.3%.

GBP/USD levels to watch

The Sterling's bullish correction from mid-August's bottom is already running out of steam, according to FXStreet's own Valeria Bednarik: "Technically, the daily chart shows that technical indicators have lost upward strength but hold within positive territory, the Momentum directionless and the RSI heading lower at 53, while the price holds above a horizontal 20 DMA, all of which limits the downside. The key is the 1.2880/90 region, where the pair has the 61.8% retracement of the 2016/18 rally, as if it gives up again, the pair will enter bearish territory. In the 4 hours chart, the bearish potential is stronger, as the pair settled at its 200 EMA, while the Momentum indicator entered negative territory almost vertically and the RSI hovers around its mid-line."

Support levels: 1.2935 1.2890 1.2850     

Resistance levels: 1.3005 1.3045 1.3085