GBP/USD drifts back closer to 1.30 handle
Having failed to build on its early up-move beyond mid-1.3000s, the GBP/USD pair ran through some fresh offers and has now drifted back closer to near two-week lows touched in the previous session.
Currently trading around the 1.3020-15 region, the pair failed to build on overnight modest recovery, led by cautious Fed speeches and was being weighed down by further Brexit uncertainty.
Following last week's dovish BoE tilt, the latest concern came after Britain's most senior judge, Lord Neuberger pushed for clarity from the government on how UK law will be impacted by European Court of Justice Legislation after the country's exit from the EU. Markets fear that this might add to the complexity to the Brexit process and was seen weighing on the British Pound.
The pair, however, has managed to hold its neck above the key 1.30 psychological mark amid persistent bearish sentiment surrounding the US Dollar ahead of today's release of JOLTS Job Openings data from the US.
• US: JOLTS job openings in focus today - Nomura
The most impactful data this week, however, would be the US inflation report, due for release on Friday, with investors watching closely for clues over the timing of next Fed rate hike action, which would eventually determine the pair's next leg of directional move.
• USD: Sentiment at record lows - BNPP
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet writes, "the 4 hours chart shows that the 20 SMA extended its slide above the current level, now around 1.3070, whilst technical indicators lost directional strength, holding flat near oversold readings. The 200 EMA in the mentioned chart keeps offering a short term intraday support around 1.3105, with a break below it favoring a slide down to 1.2965, a strong static support, followed by 1.2920."
"Ever since the week started, selling interest has contained advances around 1.3060, but it would take an extension beyond the mentioned 20 SMA to confirm additional gains up to the 1.3110/30 price zone" she added.