GBP/USD softens into 1.32 ahead of US CPI numbers as Brexit weighs

Sterling continues on the defensive as a lack of positive Brexit momentum keeps the GBP on the back foot.
The upcoming London session sees little UK-related data, but the US markets will be getting US CPI figures.
Broader markets remain mixed as traders attempt to recover risk appetite as trade angst grips global assets.

Joshua Gibson FXStreet

The GBP/USD continues to shuffle its feet into recent lows, trading into the 1.3200 major level ahead of Thursday's London markets.

Broader market sentiment has been trying to recover following the announcement of further US-China tariffs, with the Trump administration targeting another $200 billion in Chinese imports. The tariffs are expected to come into effect sometime after the eight-week public commenting period, but the GBP/USD continues to push into lows as Brexit concerns drag the Sterling down.

This Thursday is expected to see the UK's latest White Paper on Brexit, which will unveil the full details of Prime Minister Theresa May's latest "third option" Brexit proposal, which saw close support in an Exchequers vote. PM May's latest proposal has left hard-line Brexiteers within the parliament deeply unsatisfied, and five key members of the UK's Brexit department have resigned from their posts in protest, with the UK's Brexit pioneer Boris Johnson calling the proposal a betrayal of the original Brexit referendum's results. PM May is seeking to keep both sides of the ongoing Brexit negotiations happy with her latest proposals, which see the UK attempting to remain in key EU trade agreements in exchange for remaining under specific EU jurisdictions, a play that is unlikely to receive much support from the leavers, the remainers, or EU leaders themselves.

For Thursday's economic calendar, the UK sees another quiet session, with only the Bank of England's (BoE) Credit Conditions Survey, due at 08:30 GMT, but the following US session will be seeing US core CPI figures at 12:30 GMT, which markets are expecting to tick upwards to 2.3%, a minor shift higher compared to the previous reading of 2.2%.

GBP/USD levels to watch

The Sterling's technical outlook is a grim affair, and the Dollar-Pound pairing is seeing room open up for further downside, and as FXStreet's own Valeria Bednarik noted, technical indicators continue to push further into bearish readings: "the technical picture favors another leg lower for the pair, as in the 4 hours chart, it has remained capped by the 20 SMA, while technical indicators gain accelerate south within negative levels. The weekly low at 1.3189 is the immediate support, with a break below it opening doors for an extension down to 1.3110."

Support levels: 1.3190 1.3155 1.3110

Resistance levels: 1.3245 1.3285 1.3320

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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