GBP/USD holding flat for the week as traders await further Brexit developments

• The Sterling is free-floating just above 1.30 after Monday’s sideways action.
• Brexit headlines will continue to drive the GBP through the broader markets.

The GBP/USD major pairing is floating near 1.3035 ahead of Tuesday’s London session as a quiet Asian market sees calm waters following Monday’s whippy Sterling action.

The pound punched in a quick new high for the week at 1.3115 yesterday on continued Brexit upheaval, but quickly faded back into the 1.30 region, and the GBP/USD is currently sitting at near-term lows with a thin calendar on the offering for Tuesday and cautious traders watching for more Brexit headlines.

Tuesday sees the UK’s September Construction PMI at 08:30 GMT, and the mid-tier indicator is expected to contract slightly from the previous reading of 52.9 to 52.5, though markets will be expecting a more lively response to the US Federal Reserve’s Jerome Powell, who is slated to deliver yet another speech later in the day at 16:45 GMT, though the Fed head could see a limited market response if he remains in-line with his recent rhetoric following last week’s 25 basis-point rate hike.

Brexit headlines continue to plague the Pound, and UK Prime Minister Theresa May’s strategy of ‘no deal better than bad deal’ is beginning to see baying on all sides, and parliamentary Eurosceptics are working hard to undermine the PM’s authority in negotiations while cooler heads are seeking a more passable solution to the current standstill. In an effort to re-grease the wheels, PM May has floated the idea of the UK remaining within the European single market for slightly longer than previously agreed to, in exchange offering for the UK to see restricted abilities to negotiate free trade deals with outside nations for several years following Brexit, a move that will likely draw ire from Brexiteers back home, whose mantlepiece of Brexit was to secure profitable trade agreements with non-European nations as an impetus for Brexit in the first place.

GBP/USD levels to watch

The Pound-Dollar pair sees limited upside potential unless bulls can gather themselves up and make a strong push higher, an increasingly unlikely event as Brexit proceedings continue to fray at the edges. As FXStreet’s own Valeria Bednarik noted, “the 4 hours chart shows that dismissing the intraday spike, the pair spent the day confined to a tight 20 pips’ range,  unable to regain ground above a flat 200 EMA and while the 20 SMA gains bearish strength above the larger one. Technical indicators in the mentioned chart have recovered modestly but remain in negative territory, with the RSI already turning south at currently at 34, which leans the scale toward the downside. Anyway, the absence of a relevant directional breakout is directly linked to uncertainty surrounding Brexit, as, despite the positive headlines, the market would need now an official announcement from authorities to actually rush to price it in.”

Support levels: 1.3000 1.2970 1.2945                                                

Resistance levels: 1.3065 1.3100 1.3140