GBP/USD: Bulls On The Defensive Amid Risk-Off Mood

Despite the latest optimism over a possible cross-party Brexit agreement, especially after the UK Conservative and Labour Parties lost seats in local elections, the GBP/USD pair failed to capitalize on Friday's strong upsurge to one-month tops and held on the defensive through the early European session on Monday. A fresh wave of global risk-aversion trade, triggered by negative US-China trade-related news prompted some safe-haven flows towards the US Dollar and exerted some downward pressure on the major. 

Meanwhile, reports that the UK PM Theresa May will outline plans to keep EU customs arrangement until the next general election, which might help her to gain the required Parliamentary support for her upcoming Brexit deal, extended some support to the British Pound and limited any meaningful downside. With the UK markets closed in observance of May Day, absent relevant market moving economic releases from the US leaves the pair at the mercy of incoming trade-related headlines. 

Looking ahead, this week's important macro data - prelim UK GDP print and the latest US consumer inflation figures, will now be looked upon for some fresh directional impetus. However, the key focus will remain on cross-party talks, restarting on Tuesday, which might continue to act as an exclusive driver of the sentiment surrounding the British Pound.

Looking at the technical picture, the recent bullish break through 1-1/2-month-old descending trend-line and Friday's sharp turnaround from the very important 200-day SMA remain supportive of some dip-buying interest. Hence, any subsequent slide below 50-day SMA support near the 1.3100 handle seems more likely to find decent support near the 1.3060-50 region. A follow-through selling could exert some additional downward pressure but might still be looked upon as a buying opportunity near the key 1.30 psychological mark.

On the flip side, the 1.3170 region now becomes immediate resistance, above which the pair seems all set to reclaim the 1.3200 round figure mark and aim towards testing its next major resistance near the 1.3260-70 region. The positive momentum could further get extended towards the 1.3300 round figure mark before the pair eventually darts to 1.3335-40 intermediate resistance en-route YTD tops, around the 1.3380 region.

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