GBP/USD struggles to get direction below 1.2350

The Sterling is navigating a narrow range at the beginning of the week, prompting GBP/USD to trade in a tight range in the mid-1.2300s.

GBP/USD supported near 1.2300

After a brief test of sub-1.2300 levels last Friday, the pair has managed to regain some traction and take the trade back above the 1.2300 handle in response to a softer tone in the greenback today.

Spot remain under pressure via the recent bull run in EUR/GBP, as demand for the single currency seems to have picked up pace.

In the meantime, spot will remain under pressure as the outlook on the British pound stays fragile in spite of the potential favourable perspective of an improvement in trade links under the Trump administration.

It will be a very light week regarding data in the UK, with only the advanced GDP figures for the third quarter due for release on Friday.

On the positioning side, GBP net shorts have increased to the highest level since late July during the week ended on November 15 and following the latest CFTC report. Extreme positioning was another driver of the previous pick up in the pair to the boundaries of 1.2700 the figure (November 11).

GBP/USD levels to consider

As of writing the pair is losing 0.06% at 1.2336 a breach of 1.2297 (low Nov.18) would aim for 1.2081 (low Oct.25) and finally 1.1450 (low ‘flash crash’ Oct.7). On the upside, the next hurdle lines up at 1.2376 (20-day sma) followed by 1.2612 (55-day sma) and then 1.2675 (high Nov.11).