Technical Picture Sets The Stage For Sterling's Correction Lower

• The GBP/USD is trading little changed on the upside in the mid 1.3200s.
• The US President provided some US Dollar bearish comments over the weekend with little market effect some far. 
• The market is prone to believe that extending Article 50 is a central scenario for Brexit development.
• The UK construction PMI dipped into the contraction territory with a reading of 49.5 in February, which ended a ten-month period of sustained expansion.

The GBP/USD is trading little changed on the upside at around 1.3250 at the beginning of the first week of March as hopes for delayed Brexit are taking over the bearish comments from the US President Donald Trump over the weekend. The UK construction PMI dipped into the contraction territory with a reading of 49.5 in February, which ended a ten-month period of sustained expansion.

The US President Trump spoke at the Conservative Political Action Conference saying, "I want a dollar that does great for our country, but not a dollar that’s so strong that it makes it prohibitive for us to do business with other nations and take their business." The US Dollar bearish comment though had limited market impact.

On the UK domestic political scene, the junior coalition Democratic Unionist party leader Dodds said the DUP wants a European Union Treaty level change before supporting Prime Minister’s Brexit deal, adding the pressure on Theresa May that is scheduled to have a second vote on a Brexit deal in House of Commons next Tuesday, March 12.

The swing of the technical oscillators lower after the GBP/USD made a 33-week high of 1.3350 last week sees the upside for the currency pair exhausted even with the prospects of delayed Brexit.

The technical oscillators including Momentum and the Relative strength index are elevated and pointing upwards while Slow Stochastics made a bearish crossover within the Overbought territory. The most important technical feature though is the golden cross of the 50-day moving average crossing over the 100-day moving average (DMA). The golden cross is a strongly bullish technical signal that is expected to push Sterling higher long-term. In the short-term, the GBP/USD though is in corrective mode around mid 1.3200s before testing 1.3215, previous cyclical high. On the upside, the immediate target is at 1.3390 representing 61.8% Fibonacci retracement of post-Brexit recovery from 1.1800 to 1.4374.

GBP/USD daily chart