GBP/USD weakening from 1.3000 as Brexit headlines fail to keep bulls on track

Brexit headlines continue to drive false hope in the GBP/USD, sparking half-hearted bull runs.
PMI Monday could showcase growing signs of economic slowdown across both continents.

Joshua Gibson FXStreet

The GBP/USD is trading near the 1.3000 handle but to the downside heading into Monday's London market session, with little data on the docket and plenty of Brexit headlines going in both directions, and investors will have their hands full chewing through layers of rhetoric on EU -UK divorce proceedings.

UK's PM May odds of Irish border deal "50-50" - The Guardian

Brexit headlines over the weekend teased that a previously-unknown Brexit deal between the UK's Prime Minister Theresa May and EU leaders in Brussels was due to be revealed this week were quickly found to be nothing more than speculation, and Pound bulls, which initially opened the trading week pushing the Cable into a 50-pip bullish gap were quickly found falling back away as Brexit negotiations continue to go nowhere quickly, and headlines continue to run the gamut from the fearful to the hopeful and back again.

Data is thinly-spread for Monday, with only Markit PMIs spread throughout the day, with the UK's Services PMI for October due at 09:30 GMT (forecast 53.3, last 53.9), and the US Composite and Services PMIs for October due at 14:45 GMT, forecast to come in at 54.8 54.7 respectively, in-line with their previous readings.

GBP/USD levels to watch

Long-term technicals could still be leaning towards the upside, but as FXStreet's own Valeria Bednarik noted, "technically, the upward potential for the pair remains limited, as, in the daily chart, the rally stalled around a mild-bearish 20 DMA which continues gaining downward traction below the 200 EMA. In the same chart, technical indicators have recovered from oversold readings, but the advance lost strength within negative ground, with the indicators now turning lower. Shorter term, and according to the 4 hours chart, however, the scale leans to the upside, as the pair is battling around a flat 200 EMA and well above a bullish 20 SMA, while technical indicators stabilized well into positive ground after correcting extreme overbought readings."

Support levels: 1.2935 1.2900 1.2865

Resistance levels: 1.30001.3040 1.3085

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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