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  • Sterling puts in an unenthusiastic bounce after hitting a new 2018 low.
  • Brexit talks, inflation reading could help or hurt for Tuesday.

The GBP/USD is still consolidating Monday’s move that saw the Sterling flub against the US Dollar, and the pair is currently trading near 1.3425 ahead of Tuesday’s London session.

The Sterling dropped into 1.3390 on Monday, a new low for 2018, and the bounce back has been limited, but the GBP/USD has managed to hang onto the 1.3400 level for now.

Downside is still present, but upside potential exists

A fresh round of Brexit talks begins today, and positive headlines from the negotiations could send the GBP higher, while continued loggerheads over Northern Ireland borders, UK sovereignty, or the EU customs union could open up further downside weakness for the Pound.

Tuesday also sees Inflation Report Hearings beginning at 09:00 GMT; overall inflation is expected to hold steady compared to the previous period at 2.5% while core inflation is expected to contract slightly from 2.3% to 2.2%.

GBP/USD could stage surprise recovery with Brexit and CPI in focus

GBP/USD levels to watch

A bullish correction might be ripe for the picking if GBP bulls can get themselves off of the sidelines, and as FXStreet’s Chief Analyst Valeria Bednarik noted on the GBP/USD’s technical stance: “the pair has gained downward traction short-term, now developing below a mild bearish 20 SMA in the 4 hours chart. The Momentum indicator hovers within negative levels, turning south above its daily low, while the RSI indicator is steady at 33, favoring another leg lower in the pair during the upcoming sessions.”

Support levels:  1.3390 1.3355 1.3320

Resistance levels: 1.3445 1.3490 1.3520