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GBP/USD: Brexit still going nowhere, UK GDP in the barrel for Friday

11/9/2018, 2:18:53 PMMarket Analysis
GBP/USD: Brexit still going nowhere, UK GDP in the barrel for Friday

The GBP/USD is trading back into 1.3050 heading into Friday's data-packed UK market outing as the Cable begins to slip away from the mid-weeks peak at 1.3175 on broad-base Greenback selling. the US Dollar has recovered across the broader markets, and the GBP is beginning to falter in its bullish stance as the UK's latest GDP numbers come in for a landing.

Britain sees a hefty data dump at 09:30 GMT Friday morning, with Business Investment, Manufacturing Production, Industrial Production, Trade Balance (both EU and non-EU), and Services Index, but the key numbers for the week's end will be the kingdom's GDP reading. Sterling bulls will be hoping for a month-on-month print of 0.1% (last 0.0%), while the quarter-on-quarter release for 2018's third quarter is expected to improve to 0.6% (last 0.4%), but a wobbly domestic economy could see the GBP give up recent gains if today's headline reading misses expectations.

Brexit headlines continue to flow out of the United Kingdom, but little progress has been made on talks, and hopes for a Friday breakthough have been building in recent days, but with little evidence of softening on either side of the Channel, its unlikely that a legitimate framework could be announced today, leaving Brexit hopes in the lurch once more, while rhetoric-heavy announcements could see hopeful bidding get faded at an increasing rate as the narrative surrounding negotiations continues to read significantly more hopeful than actual results.

GBP/USD levels to watch

The Cable has begun to loosen its grip on recent bullish price action, and according to FXStreet's own Valeria Bednarik, the recent drop below 1.3100 could signal further declines: "the pair extended its decline after breaking below the 1.3100 figure, now bearish according to intraday technical readings, as in the 4 hours chart the pair is now below a bullish 20 SMA around 1.3095, while technical indicators accelerated their declines entering negative ground, all of which puts the pair at risk of falling further. The bullish potential has eased and bears are slowly taking control of the pair. Below 1.3040 the risk of a downward extension will be higher, and if UK data comes below expected this Friday, the pair could end the week closer to the 1.2900 level."

Support levels: 1.3040 1.3000 1.2970    

Resistance levels:  1.3095 1.3130 1.3175