GBP/USD Forecast: Sterling Off 6-Week High Supported By 55 SMA

• Sterling eases off 6-week high as trade tensions intensify
• UK Prime Minister Theresa May will attend the unofficial Brexit summit in Salzburg on Thursday with more insights of how Brexit deal is doing.
• The EU chief Brexit negotiator Michel Barnier is expected to hold a press conference later on Tuesday after meeting European affairs ministers.

Sterling is trading off 6-week high reached earlier on Tuesday at 1.3171 as trade tensions intensified with China saying it would retaliate against the tariffs move announced by the US President last week. Moreover, China´s Commerce Ministry said it won´t be sending officials for the trade talks to Washington DC.

The recent wave of Brexit deal optimism lifted the GBP/USD with the European Union officials saying the Brexit deal is achievable within 5-7 weeks and started to work on the proposal for the Irish border solution. More headlines are expected to come later on Tuesday after the EU chief Brexit negotiator Michel Barnier meets with the European affairs ministers. 

The UK will see both main political parties conferences with the Conservative party seen some rebellion against the leadership of Theresa May while the Labour party is expected to oppose the Brexit solution.

Technically, the GBP/USD is moving within the upward trend since falling to 1.2785 last week. The Brexit optimism and the dragging of the trade wars are helping Sterling to recover from the previous lñoses as the currency pair fell from the cyclical high of 1.4377 on April 17 to 1.2662 on August 15 this year. The GBP/USD broke above 1.3045 level representing a 23.6 percent Fibonacci retracement of the move from 1.4377 to 1.2662 and now it is facing a 100-day moving average of 1.3185 on the daily chart before targeting 1.3300 representing 38.2 percent Fibonacci retracement.

GBP/USD 1-hour chart