- Friday's sharp drop in the GBP/USD found support at 1.3055 (23.6% Fib retracement of the recent rally).
- The pair failed to scale the 100-day MA hurdle yesterday.
- Brexit uncertainty and caution ahead of the Fed could keep the pair range-bound today.
Currently, the GBP/USD pair is trading at 1.3104, having hit a high of 1.3124 in Asia.
The pair fell sharply on Friday after the UK PM Theresa May informed markets that Brexit negotiations have reached a standstill. However, the bears failed to penetrate 1.3055 (23.6% Fib R of 1.2662/1.3299), establishing the key Fibonacci level as a strong support.
Meanwhile, the pair failed to beat the 100-day MA yesterday. As a result, the long-term MA is the level to beat for the bulls. That said, the 1.3055-1.3146 range may remain intact today on account of caution ahead of the Fed.
If anything, the lower end of the range could come under pressure as markets may start pricing-in prospects of above-neutral interest rates, tracking the rise in oil prices. Further, comments from UK's Brexit Secretary Raab indicate the UK government is unlikely to bend easily to EU's demand, meaning the uncertainty over EU-UK Brexit negotiations is here to stay for a long time.
GBP/USD Technical Levels
Resistance: 1.3146 (100-day MA), 1.3205 (61.8% Fib R of 1.3299/1.3055), 1.3299 (Fri's high)
Support: 1.3098 (Sept. 19 low), 1.3055 (38.2% Fib R of 1.2662/1.3299), 1.2979 (50-day MA)
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