It is a toss-up for fiscal stimulus and EU/UK negotiations to kick-off next month for GBP traders. GBP/USD testing critical support area in a rising channel, capped by 61.8% Fibo retracement level. On a week jam-packed with UK data, GBP/USD is in the hands of the bears again with a persistent bearish retracement of the 4-hour extension from 1.2944. GBP is now on the verge of completing a 38.2% Fibo retracement in an extension of a four-hour reverse head and shoulders. At the time of writing, GBP/USD trades at 1.2999, travelling lower within a range of between 1.3054 and 1.2998. GBP/USD is facing its first daily loss in six days of correcting higher within a bullish channel in completing a 61.8% Fibonacci retracement of the February downtrend. The fundamental drivers are scarce at the start of the week. However, it is a toss-up now between the resignation of Javid as Chancellor last week which has opened the door for Downing Street to oversee an increase in fiscal spending in the budget which could make further rate cuts less likely vs the rise in EU/UK political tensions that could undermine the pound for the foreseeable future. Over the weekend, France’s foreign minister Le Drian warned that the UK and the EU will ‘rip each other apart’ in the trade talks which are due to start next month. In recent trade, we heard from the UK’s Brexit negotiator, David Frost, who set out Britain’s goals for talks over its future relationship with the European Union in a speech in Brussels as the two sides prepare to thrash out an agreement before the end of the year. Frost said that Britain aims to minimise as much as it can trade friction through customs facilitation, claiming that a deal can be achieved quickly. Frost also said that London was prepared to accept an “Australia-style” free trade agreement with the bloc if its member states continue to have doubts about the terms of a no-quotas, no-tariffs deal – more on that here. Key data week ahead UK employment preview: Three reasons why GBP/USD could bounce even if wage growth slows Meanwhile, we look to this week’s key data releases data of which could be key in assessing the actions of the BoE in the coming months. These will include December labour figures and Consumer Price Index as well as the flash PMIs for the UK which will give us a first good look at how the coronavirus outbreak is affecting business sentiment. “UK sentiment, in particular, may also be affected by antagonistic language around EU-UK trade negotiations, and the government announced that there will be frictions at the border beginning in 2021,” analysts at TD Securities argued. As for, CPI, the analysts at TD Securities expect the data to come in well below the BoE’s estimate of 1.8% YoY. “Our divergence is entirely in core, where we look for core CPI to hold steady while the BoE has forecast an extremely sharp rebound to 1.7% YoY. We think that meets one of the BoE’s two criteria for easing (“should indicators of domestic prices remain relatively weak”), supporting our call for a May rate cut.” In addition, Wednesday brings the release of the minutes of the January 28-29 FOMC meeting and a number of key Fed speakers. The FOMC minutes are expected to reflect a ‘steady as she goes’ Fed policy, while a mix of opinions from the likes of Kashkari, Mester, Kaplan, Brainard and Clarida will be in store. GBP/USD levels We are seeing the aforementioned Fibonacci levels being both respected and targetted, which analysts at Commerzbank argue that GBP/USD looks supported by the 1.2929/08 band – Commerzbank GBP/USD Forecast: Pressure mounts on Pound ahead of budget´s deadline FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street Expert score 5 Etoro - Best For Beginner & Experts0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 5 Read Review Open My Free Account Your capital is at risk. FXStreet News share Read Next Bitcoin Cash Price Analysis: BCH/USD pushes above 400.00 once again FX Street 2 years It is a toss-up for fiscal stimulus and EU/UK negotiations to kick-off next month for GBP traders. GBP/USD testing critical support area in a rising channel, capped by 61.8% Fibo retracement level. On a week jam-packed with UK data, GBP/USD is in the hands of the bears again with a persistent bearish retracement of the 4-hour extension from 1.2944. GBP is now on the verge of completing a 38.2% Fibo retracement in an extension of a four-hour reverse head and shoulders. At the time of writing, GBP/USD trades at 1.2999, travelling lower within a range of between 1.3054 and 1.2998. 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