GBP/USD sees signs of life on Brexit news, eyes 1.2900 ahead of US GDP

Stalled USD recovery, fresh Brexit deal news rescue the GBP bulls.
US Q2 GDP and core inflation data eyed for near-term trading opportunities.

Dhwani Mehta FXStreet

The GBP/USD pair is seen showing some signs of life last hour, as the GBP bulls were offered some respite from the Bloomberg report that the Brexit deal is now seen likely by mid-November.

Meanwhile, the renewed weakness seen around the US dollar amid US-China trade spat and profit-taking ahead of the USQ2 prelim GDP release also helped cap the losses in Cable. The US dollar index stalled its recovery at 94.80 and now eases towards 94.60 levels.

However, it remains to be seen if the major can sustain the bounce amid a data-empty UK docket while the GBP markets remain wary that the longer timeframe (previously October deadline) to reach the Brexit deal could be another indication that negotiators are struggling to make headway, and the risk is that the closer talks run to the UK’s exit on March 29, the greater the chance that there won't be a deal.

Also, an uptick in the US Q2 GDP growth figures could lift the sentiment around the buck, in turn refueling the decline in the GBP/USD pair. Besides, the US PCE inflation and July pending home sales data will also have a significant impact on the dollar trades.

GBP/USD Technical Levels

FXStreet’s Chief Analyst, Valeria Bednarik, notes: “Technically, the pair presents a neutral stance, having once again being rejected by sellers around the 38.2% retracement of the July/August decline. In the 4 hours chart, the pair is holding above a flat 20 SMA, while technical indicators head modestly lower but remain within positive levels. The 23.6% retracement of the same decline at 1.2835 is now a relevant support as once below it, the pair could resume its bearish trend. Support levels: 1.2835 1.2800 1.2770. Resistance levels: 1.2935 1.2960 1.2990.”

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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