GBP/USD Forecast: Easing Within Range, But Holding Above The Critical 1.2820 Support

GBP/USD Current Price: 1.2885

• UK Markit Services PMI beat expectations in October by printing 50.
• EU’s Chief Negotiator Barnier concerned about the future relationship with the UK.
• GBP/USD easing within range, but holding above the critical 1.2820 support.

The GBP/USD pair edged marginally lower this Tuesday, extending its weekly decline by a few pips to 1.2858, ending the day little changed in the 1.2870 price zone. The pair hit a daily high of 1.2917 following the release of the UK Markit Services PMI, up in October to 50 from 49.5 in September, also beating the market’s expectations. Nevertheless, the upbeat report was not enough to keep the pair in the green, as resurgent demand for the American currency weighed more.

In the Brexit front, little new happened. EU’s Chief Negotiator Barnier was on the wires, repeating familiar words over the matter. Among other things, he remarked that, even if the deal is ratified, a new partnership would be needed with the UK, adding that negotiations will be "difficult."

The UK won’t release relevant data this Wednesday, with attention on Thursday, BOE’s monetary policy announcement. The central bank is expected to remain on-hold, although policymakers always have the chance of surprising market players.

GBP/USD Short-Term Technical Outlook

The GBP/USD pair has eased just modestly, holding above the 23.6% retracement of its latest bullish run. The short-term picture indicates that the risk is skewed to the downside, although the bearish potential is limited, as the Sterling is generally immune to the dollar’s development. In the 4-hour chart, the pair is trading below a flat 20 SMA, but holding above 100 SMA, while technical indicators remain within negative levels, although without clear directional strength. The mentioned Fibonacci support stands at 1.2820, and the pair would need to break below it to turn bearish.

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