GBP/USD struggling to find a foothold ahead of the BoE inflation report hearing

Brexit continues to keep the Sterling underwater, odds of a messy exit continuing to rise.
The BoE's inflation report to the parliament will be dropping today.

Joshua Gibson FXStreet

The GBP/USD is trading into 1.2860 ahead of Tuesday's London market session after slipping on Monday as weekend Brexit headlines took their toll on Pound buyers.

Brexit negotiations are stuck in a rut, with the EU's head negotiator Michel Barnier again shooting down UK Prime Minister Theresa May's Brexit proposal. Talks took a hopeful turn last week when Barnier struck a notably reconciliatory tone, but headlines over the weekend saw the brakes applied to any expectations of a quick resolution, and now PM May continues to find herself stuck between EU leaders in Brussels and hard-line Brexiteers within her own Conservative ruling party both accusing the Prime Minister of not doing enough to further each side's own interests.

Tuesday brings the UK's latest Construction PMI for the year into August at 08:30 GMT, forecast to dip from 55.8 to 54.9, while the big news of the day will be the UK's Inflation Report Hearings, due at 12:15 GMT and will see the Bank of England's Governor Mark Carney and several of the MPC members testifying before the British parliament on the current state of inflation within the UK economy, as well as the central bank's economic outlook. No deviating statements are expected during the hearings, but traders will have to keep an eye out for any talking points that might indicate a shift in the BoE's current fiscal policy stance.

GBP/USD levels to watch

With the Sterling hung out to dry on middle-of-nowhere Brexit talks, bearish potential remains built into the GBP/USD, and as FXStreet's own Valeria Bednarik noted, "technically, the pair is struggling around the 61.8% retracement of the 2016/2018 rally, unable to recover above it ever since mid-London morning, which increases the risk of another bearish extension for the upcoming sessions. In the 4 hours chart, the pair is trading below its 200 EMA and 20 SMA, while technical indicators consolidate near oversold readings, also leaning the scale toward the downside."

Support levels: 1.2845 1.2800 1.2770

Resistance levels: 1.2910 1.2955 1.3000

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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