- The Pound is waffling near 1.3150 after Monday's bull-run off of a bearish gap looks set to go nowhere.
- Tuesday's UK earnings report to be a quick flash in the pan with Brexit angst looming overhead.
The GBP/USD is trading near 1.3150 ahead of the London market session for Tuesday, and the week's early bullish push looks set to have already run out of steam as continued Brexit stress presents a significant thorn in the Pound's side.
Last weekend's hopes for a well-grounded plan to have a Brexit plan came tumbling down on Monday as the two sides continue to disagree on a plethura of issues, notably the Irish border question which has yet to see any answers attempted, and the potential for the UK to remain within the EU's customs union for an undefined amount of time following Brexit-day next March, drawing significant ire from hard-line Eurosceptics within UK Prime Minister Theresa May's own ruling Conservative party.
The Brexit headache can be expected to continue pulling on the Cable this week, especially ahead of Wednesday's European Union leadership summit, where a Brexit outline was initially slated to be proposed. Any plans or agreements delivered at the Brussels summit are unlikely to contain any meaningful details or arrangements, though Brexit-weary markets could find the gumption to hit the buy button even if the ghost of a Brexit agreement presents itself after months of little to no progress.
Tuesday brings Average Earnings figures for the UK at 08:30 GMT, and Sterling market participants are bracing for an expected contraction in the headline figures, with the q/y figure (not including bonuses) into August expected to print at 2.8%, a mild tick lower than the previous quarter's 2.9%.
GBP/USD levels to watch
Monday's bullish recovery may have seen an early end with the Cable leaning towards the downside once more, according to FXStreet's own Valeria Bednarik: "in the 4 hours chart, a mild bearish 20 SMA capped the upside, while technical indicators have retreated from their midlines, now heading nowhere but within negative ground. Much of the upcoming direction, however, will be more linked to Brexit headlines than to technical readings, with chances of a bullish breakout on renewed hopes pushing the pair to retest the recent high in the 1.3245 price zone."
Support levels: 1.3130 1.3095 1.3050
Resistance levels: 1.3170 1.3200 1.3245
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