GBP/USD getting tied up near 1.2750 ahead of BoE Carney, US FOMC double-feature
- Sterling cycling near key swing highs as markets await a spark.
- Brexit remains an ever-present bearish factor, but risk appetite is focused mainly on US-China trade talks.
GBP/USD continues to spiral around the 1.2750 level heading into the mid-week as global markets continue to lean towards the risk-on side, with investors holding onto hopes that geopolitical tensions will be softened following US-China trade talks currently underway.
High-level trade talks are still ongoing between the US and China, with the two-day event getting extended an extra day, and investors are hoping that the conclusion of the negotiations will results in forward progress towards de-escalating current trade tensions between the two superpowers, with exchanges of tariffs helping to cut global growth projections and bring about fears of a broad slowdown in 2019.
While broader markets await trade talk conclusions, Brexit continues to weigh on the Pound, keeping the Cable under wraps despite recovering risk appetite, and Sterling traders will be buckling down ahead of the UK's House of Commons vote on January 14th, where Prime Minister Theresa May's much-despised Brexit withdrawal agreement will finally face the UK's parliament, which is almost guaranteed to axe the deal, even if that means dedicating Britain to a path towards a hard Brexit.
The economic calendar delivers a pairing of central bank action for the Cable today, but not until much later in the day, with a speech from the Bank of England's (BoE) Mark Carney at 15:30 GMT, while the US FOMC's latest Meeting Minutes will be dropping at 19:00 GMT, which is expected to be followed by a live, off-the-cuff press conference with Fed head Jerome Powell shortly thereafter. With no hard data on the docket, geopolitical matters and central bank posturing will be determining GBP/USD's direction heading into the second half of the week.
GBP/USD Levels to watch
Despite plenty of factors to keep traders out of the Sterling, the US Dollar faces its own headwinds on the back of a dovish Fed that is set to tumble off its previous path of interest rate hikes for 2019, giving the Sterling a chance to remain afloat, with FXStreet's own Valeria Bednarik noting that, "as in the 4 hours chart, it's battling with a bullish 20 SMA and a couple pips below the 200 EMA. Technical indicators in the mentioned chart have retreated further from their highs but lost downward strength after nearing their midlines, somehow suggesting speculative interest is not ready to buy the greenback at a more sustainable pace."
Support levels: 1.2695 1.2655 1.2620
Resistance levels: 1.2745 1.2780 1.2815