- Sterling is so far flubbing the technical correction, sticking close to Tuesday’s bottom.
- Brexit concerns and a looming BoE rate call will likely keep traders out of the heavy action until Thursday.
The GBP/USD is trapped near recent lows close to 1.3150 ahead of Wednesday’s London market session, with little impactful news on the docket and continued Brexit confusion taking the wind out of buyers’ sails.
Wednesday and free and clear of impactful events on the economic calendar, and the only event for the GBP side is the low-impact CBI Industrial Orders survey for June, which last came in at -3 and is expected to come in today at a reading of 1, slated for 10:00 GMT.
Later on in the US session is another story, with a trio of major central bank speeches scheduled for 13:30 GMT with the US Fed’s Powell, the European Central Bank’s (ECB) Draghi, and the Reserve Bank of Australia’s (RBA) Lowe all delivering their notes at the same time, though market sentiment will be driven mostly by what the Fed’s Jerome Powell has to say today, with both the RBA and the ECB hitting dovish notes lately.
Elsewhere on the UK to-do list is Brexit negotiations, which continue to deliver little or no good news as the Irish border issue continues to remain unresolved and the House of Lords recently retracting Prime Minister Theresa May’s voting win, and further complicating the exit negotiation process. Talks continue to break down as both sides consistently fail to reach concessions on key topics, and the EU’s Bernier recently warned that the UK needs to be prepared for a hard Brexit scenario.
GBP/USD levels to watch
As noted by FXStret’s own Haresh Menghani, “technically, the pair on Tuesday fell below 50% Fibonacci retracement level of the 1.1987-1.4377 upsurge and hence, remains vulnerable to extend the downfall even below the 1.3100 handle, towards testing its next support near the 1.3040-30 region. The bearish break has the potential to continue dragging the pair further below the key 1.30 psychological mark towards testing 61.8% Fibonacci retracement level support near the 1.2910-1.2900 region.
On the flip side, any meaningful recovery attempt might now confront fresh supply near the 1.3200 handle, above which a bout of short-covering could assist the pair to make a fresh attempt towards reclaiming the 1.3300 round figure mark with some intermediate resistance near the 1.3250-60 region.”
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