GBP/USD Forecast: 1.35 Mark Now Becomes A Key Hurdle, Brexit News To Remain In Focus

On Friday, the GBP/USD pair stalled its recent upsurge and failed to sustain its early strength o fresh 2-month tops, despite supportive UK manufacturing PMI. The pair subsequently witnessed a bearish gap opening on Monday amid resurgent US Dollar demand, led by optimism over the passage of a long-awaited US tax overhaul bill on Saturday. 

News that the EU and the UK may have reached an agreement on the so-called Brexit divorce bill, which had been one of the key factors behind the pair's strong rally in the past week, helped limit deeper losses. The pair has managed to bounce off few pips from lows, albeit once again lacked any strong follow-through momentum beyond the 1.35 handle as investors look forward to the UK PM Theresa May and the EU President Jean-Claude Juncker's meeting to work on a Brexit deal.

On the economic data front, the UK construction PMI and the US factory orders data might also be looked upon to grab some short-term trading opportunities.

Technically, the pair’s retracement could be categorized as corrective in nature but could get extended in case of a break back below the 1.3400 handle. Sustained weakness below the mentioned support is likely to accelerate the fall towards 1.3340 intermediate support en-route the 1.3300 round figure mark.

On the upside, bulls would be eyeing for a sustained move back beyond the 1.35 mark, above which the pair seems more likely to surpass mid-1.3500s hurdle and head towards testing 1.3580 resistance before aiming to reclaim the 1.3600 handle.