GBPUSD Capped at 1.34 Handle amid Brexit Woes

The GBPUSD pair is trading flat in lower half of 1.34 price handle across Asian market hours as the Sterling struggles to develop momentum with investors awaiting fresh headlines on Brexit. The GBP faced a rough ride on Thursday, marking in an outside candle as the pair hit both new highs and a fresh low against the previous day before ending the day near where it started. And the Sterling is trading flat ahead of a European session that sees little data on the economic calendar to finish off the week. Today’s  focus will largely swing to the upcoming G7 summit meeting, where US President Donald Trump will be joining a group of his fellow world leaders where current trade tensions are sure to take front-and-center of discussion.

GBPUSD Consolidates

The decline in GBPUSD’s momentum came mid-American market hours influenced by Brexit jitters. The reason for the worry on Brexit was caused due to tensions within PM May’s cabinet over the Irish border issue. There were some rumors making the rounds at the beginning of the day suggesting that Brexit minister, David Davis, could step down on differences with PM May. After multiple backs and forth’s all through the day, the British government set a goal for a one-year backstop plan that would see the UK remain in a customs union with the EU if there’s not a solution for the Irish hard border issue.  Anyway, this backstop plan has to be agreed by EU officials, who have already commented against it.

The BOE will release its consumer inflation expectations later today and the outcome is expected to remain unchanged at 2.9% and is not a big market mover. As it happens with other major economies next week´s UK calendar will be much more interesting in terms of data releases, including inflation and employment updates. The GBP/USD pair bottomed at 1.3372 and regained the 1.3400 on broad dollar’s weakness and comments from BOE´s Ramsden, who said that the slowdown in Q1 was temporary and that wages are set to rise. Looking from technical stand point the price action in 4hr chart shows that the buying interest defended ground around a bullish 20 SMA, while technical indicators have retreated from overbought levels, but pared their slides and are actually trying to regain the upside. Expected support and resistance for the pair are at 1.3395 / 1.3360 / 1.3320 and 1.3450 / 1.3490 / 1.3530 respectively.