GBP/USD struggling to hold 1.31 as Brexit weighs on Sterling traders, eyes on US PMI

The Sterling continues to waffle to the weak side as Brexit concerns drag the GBP down.
The upcoming London session promises to be a quiet showing unless new Brexit development headlines drop, and traders will be looking for volatility from the US' PMIs due later.

Joshua Gibson FXStreet

The GBP/USD remains trapped by continued fretting over Brexit, trading just beneath 1.3100 heading into Tuesday's London market session as the major pair continues the current trend of slumping into fresh lows.

The Sterling has closed lower against the Greenback for three straight months, and is currently on pace to make it a fourth with July leaning into the bearish side. Brexit continues to be a thorn in the side of Sterling bulls, hampered by the steadily-rising chance of a disorderly exit from the European Union as a successfully-negotiated trade deal between hard-line leavers in the UK's parliament and staunch European leaders in Brussels continues to look like a slim occurrence. Prime Minister Theresa May continues to stick to her guns, ruling out the possibility of a second Brexit referendum, and newly-appointed Brexit Secretary Jeremy Hunt accused the European bloc of essentially trapping the UK in a giant game of chicken, claiming that "many people in the EU are thinking that they just have to wait long enough and Britain will blink". European leaders made a point of delivering a statement that nobody wants to see a hard-landing Brexit, whether on accident or otherwise, and that everyone is working hard to ensure that an orderly Brexit happens.

Tuesday's economic calendar for the GBP/USD is an anemic showing, with the only GBP-focused release being the low-tier CBI Industrial Trends Survey, coming in at 10:00 GMT, and the m/m survey for July is expected to contract from 13 to 10, a bearish showing for executive's opinions on forward-looking output expectations. The upcoming US session will also be the m/m May Housing Price Index at 13:00 GMT, forecast to tick up from 0.1% to 0.4%, while the preliminary Markit Composite PMI for July, due at 13:45 GMT, is expected to shift down from 56.2 to 56.0.

GBP/USD Levels to watch

The Sterling remains trapped by concerns on both sides of the Atlantic, with trade wars denting the US Dollar, and GBP bulls being held at bay by ongoing Brexit tensions. As FXStreet's Chief Analyst Valeria Bednarik noted on the GBP/USD's technical outlook: "the GBP/USD pair settled mid-US afternoon around 1.3100, retreating from a 4-day high of 1.3157 but held at the upper end of Friday's range. Technically, the 4 hours chart shows that it's still holding above a mild bullish 20 SMA, but also that technical indicators retreated after a period of consolidation, with the RSI indicator entering negative territory, supporting additional declines ahead on a break below 1.3080 where the pair topped a couple of times last week and is now the immediate support."

Support levels: 1.3080 1.3035 1.3000

Resistance levels: 1.3155 1.3195 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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