- Brexit headlines, USD dynamics to keep the traders on the edge.
- However, tight trading will persist heading into the key Fed decision.
The GBP/USD pair is seen extending its Asian side-trend into Europe, but returns to the red zone near 1.31 handle, despite US dollar selling, as Brexit jitters continue to weigh.
The US dollar index failed once again near 94.35 region and reversed to 94.20 level amid ongoing US-China trade tensions while investors turn cautious heading into the Fed’s rate hike decision. The Fed is likely to hike the benchmark interest rates by 25bps, however, the forward guidance will be closely eyed for fresh dollar trades.
Meanwhile, Monday’s optimistic comments from the UK Brexit Minister Raab helped keep the recovery mode intact around the pound after last week’s steep sell-off. Cable lost more than 200-pips on Friday after the EU rejected the UK PM May’s Exchequer’s Brexit plan.
In the day ahead, the spot will continue to get influenced by the US dollar price-action and Brexit-related developments amid a lack of fresh fundamental drivers. Also, of note remains the speech by the BOE policymaker Vlieghe due later at 0840 GMT.
GBP/USD Technical Levels
FXStreet’s Analyst Haresh Menghani noted: “Looking at the technical picture, the 100-hour SMA had been acting as an important support over the past two weeks or so. The said SMA coincides with 23.6% Fibonacci retracement level of the 1.2662-1.3298 recent upsurge and hence, becomes an immediate strong hurdle to conquer. A convincing break through the mentioned barrier might trigger a fresh leg of up-move back towards the 1.3200 handle.”
‘On the flip side, a sustained weakness back below the 1.3100 handle is likely to accelerate the fall back towards the 1.3055-50 support area, marking 38.2% Fibonacci retracement level. A follow-through selling might now turn the pair vulnerable to slide below the key 1.3000 psychological mark towards testing the 50% Fibonacci retracement level support,” Haresh adds.
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