- The GBP/USD is ticking up in range, rising on USD weakness.
- German Chancellor Merkel joins the chorus about Brexit.
- The technical picture is not that great for the pair.
The GBP/USD is trading at 1.3150, slightly higher on the day. The US Dollar is losing some ground after strengthening earlier. Brexit headlines continue to come at a rapid clip, but the Pound may have become immune to them.
German Chancellor Angela Merkl said that an agreement about Brexit could come in October, but also commented that “it is not clear what Britain wants.” This comment is consistent with the disparaging remarks by other European officials. Last week’s Salzburg Summit ended with the EU rejecting Britain’s Chequers proposal.
The opposition Labour Party is holding its annual conference and could agree to support a second EU Referendum. They are also likely to decide on opposing any deal that May reaches with the EU.
Bank of England member Gertjan Vlieghe said that more communication would be needed as QE is unwound. The BOE seems from far reducing its balance sheet as it awaits Brexit.
In the US, tensions with China over trade continue, with the world’s second-largest economy saying it refuses to negotiate under threats. The Conference Board consumer confidence measure is due later on and is forecast to slide from the highest levels since November 2000.
The most significant event of the week is the rate decision of the Federal Reserve. The US central bank is projected to raise rates now and signal another increase in December. Future monetary policy remains a mystery.
See: Fed Preview: Tight or not so tight? Dollar Domination awaits
GBP/USD Technical Analysis
The GBP/USD is battling the 50 Simple Moving Average on the four-hour chart after losing it yesterday. It still trades above the 200 one, but Momentum remains negative. The Relative Strength Index is quite neutral.
1.3180 capped the pair late last week. Further resistance awaits at 1.3225 which supported the GBP/USD when it temporarily traded at the high ground last week. The peak of 1.3300 is next in line.
1.3100 provided support early in the day and was also a swing low last week. 1.3050 was the low point on Friday and also a stepping stone on the way up. Lower, we see 1.2970 after it worked as a line of support in mid-September.