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GBP/USD struggling to find a foothold as 1.3450 sits overhead

5/21/2018, 3:02:54 PMTrading Strategies
GBP/USD struggling to find a foothold as 1.3450 sits overhead

The GBP/USD is trading on the low side for Monday, testing near 1.3430 ahead of the London market open.


The Sterling is being taken down a peg as Brexit headlines continue to weigh down the GBP, and a lack of resolution on the Irish border is plaguing the UK's Parliament, and Scottish independence has reared its head once again, with key leaders threatening to return to the polls once again following Brexit. UK Prime Minister Theresa May is having a difficult time making moves on Brexit, with EU leaders in Brussels on one side of her and hard-line Brexiteers within her own party on the other. The March 2019 deadline for a hard Brexit date has been struck from legislation lately, and a successful trade deal with the EU is hinging on a successful resolution of the Irish border debate.


Monday is a quiet showing for the Sterling this week, and eyes are already turning to Wednesday inflation figures, due at the Inflation Hearings beginning at 08:00 GMT, with Retail Sales close behind on Thursday. Traders are hoping to see some kind of rebound in the UK's economy, which continued to slump through the first quarter of 2018 and forcing the Bank of England (BoE) to walk back their May rate hike intentions.


GBP/USD levels to watch


With the Sterling falling out the bottom of 2018's previous consolidation range, technicals are leaning heavily bearish, and as FXStreet's Chief Analyst Valeria Bednarik noted, "technically the daily chart shows that the 20 DMA heads south almost vertically some 100 pips above the current level, and also that the Momentum indicator heads nowhere right below its mid-line, while the RSI indicator heads lower at 26, having spent almost a month in oversold territory. In the 4 hours chart, the pair presents a neutral-to-bearish stance, holding below a modestly bearish 20 SMA, and with technical indicators heading south, the Momentum within neutral levels, but the RSI gaining downward traction, now around 40, favoring additional declines ahead."


Support levels:  1.3450 1.3410 1.3370


Resistance levels: 1.3490 1.3520 1.3570