GBP/USD Price Forecast – GBP/USD Moves Downtrend Post Bullish Opening Over Brexit headlines

The GBP/USD has kicked off the new trading week with a 50-pip gap into 1.3020 over optimism surrounding Brexit deal post weekend report in Sunday Times stating that Prime Minister May has planned an all-UK customs deal with the EU, which would resolve the Irish border issue. The optimism, however, was short-lived as May’s office dismissed that report as speculation. Further, the Telegraph reported that British Brexit Secretary Dominic Raab on Tuesday privately demanded the right to pull Britain out of a “backstop” arrangement for the Irish border after three months. That pitch may not be acceptable to the European Union. These conflicting reports are complicating matters for the GBP traders and resulted in pair falling below 1.3000 handle. As of writing this article, the GBPUSD pair is trading at 1.2997 down up by 0.22% on the day.

Both Brexit Updates & Macro Data To Drive The Pair’s Momentum For the Day

When looking at pair in the hourly chart, price action seems to be heading in downwards direction ahead of Monday’s London market session. With little data on the docket and plenty of Brexit headlines going in both directions, investors will have their hands full chewing through layers of rhetoric on EU -UK divorce proceedings. Data is thinly-spread for Monday, with only Markit PMIs spread throughout the day, with the UK’s Services PMI for October due at 09:30 GMT (forecast 53.3, last 53.9), and the US Composite and Services PMIs for October due at 14:45 GMT, forecast to come in at 54.8 54.7 respectively, in-line with their previous readings.

When looking from technical perspective, the upward potential for the pair remains limited, as, in the daily chart, the rally stalled around a mild-bearish 20 DMA which continues gaining downward traction below the 200 EMA. In the same chart, technical indicators have recovered from oversold readings, but the advance lost strength within negative ground, with the indicators now turning lower. According to the 4 hours chart, however, the scale leans to the upside, as the pair is battling around a flat 200 EMA and well above a bullish 20 SMA, while technical indicators stabilized well into positive ground after correcting extreme overbought readings. Expected support and resistance for the pair are at 1.2935, 1.2900, 1.2865 and 1.3000, 1.3040, 1.3085 respectively.