GBP/USD staggering into 1.31 as Brexit continues to weigh ahead of the UK CPI reading

Sterling continuing on the defensive despite an unexpected win for PM May on her Brexit strategy.
Inflation figures for the UK are due Wednesday, and Pound buyers will be looking for a positive read to halt the current downside.

Joshua Gibson FXStreet

The GBP/USD is trading tightly to Tuesday's close, playing near 1.3110 after a drop into 1.3067 saw a mild rebound on Prime Minister Theresa May's last-minute win in the House of Commons.

The Sterling headed south through Tuesday's action, dropping from the day's high of 1.3267 in the run-up to a Brexit vote in the House of Commons, where Labour voters were expected to side with conservative Tories and vote to make extreme changes to PM May's latest Brexit proposal. The Prime Minister managed to pull out a last-minute win, and the GBP/USD managed to recover from the day's low, but the pair remains deeply bearish as Brexit is set to continue weighing on the Pound.

Wednesday brings high-impact Consumer Price Index numbers early in the London session at 08:30 GMT, and the y/y CPI is expected to tick upwards to 2.6%, compared to the last reading of 2.4%, while Core CPI is expected to move from 2.1% to 2.2%.

GBP/USD levels to watch

The GBP/USD remains trapped on a bearish spiral, heading further down the charts, and as FXStreet's own Valeria Bednarik pointed out, "the 4 hours chart for the pair shows that, despite the latest bounce, the bearish momentum remains strong ahead of the Asian opening, with technical indicators flipping into the red almost vertically after the price broke with a huge volume candle through its 20 SMA. The decline is set to extend on a break below 1.3100, as the pair bottomed at 1.3102 last week and at 1.3106 this Tuesday, with the pair then probably approaching the key 1.3000 threshold."

Support levels: 1.3100 1.3065 1.3030

Resistance levels: 1.3155 1.3190 1.3240

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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