FX Market Recap
Financial markets recovered from the latest acceleration in trade tensions within the U.S. and China as a slight respite for Huawei from the U.S. government directed investors buying into the dip.
The dollar index slid from a three-week high on Monday and Tuesday, moving to 97.93 from 98.01 in the previous session.
Chinese ambassador to the European Union Zhang Ming announced China could counterattack against the U.S. after the U.S. government blacklisted Huawei.
The Sterling pound concluded broadly unchanged at $1.2728, floating nearby the lowest level since January 9. The U.K. Chancellor Philip Hammond announced he would begin a notice of no-deal Brexit as Cabinet gathers on Tuesday.
The U.S. indices completed the day steadily with the Nasdaq up over 1% and the S&P and Dow not far behind.
Sterling Under Pressure Over Brexit - Quick Fundamental Analysis
The GBP/USD pair is still vulnerable over the uncertainty spread by Brexit. Theresa May appears to wish to go down fighting all the way on Brexit. She presented another proposal to parliament in an effort to break the long-running deadlock between parties.
On Tuesday, she promised to put her agreement to the second referendum if parliament accepted it and initial optimism was quickly dismissed as both of the parties pushed back at the proposal.
Things now look set for further political instability in the UK which could bring the possibility of a hard Brexit back to the fore, and both scenarios will be likely seen an increase in volatility and put more pressure on the pound.
U.K. Inflation - Economic Event In Highlight
During the London session, at 8:30 GMT, the Office for National Statistics will be releasing UK Inflation figures. Consumer price action has declined in recent months, with headline inflation falling to 1.9% year over year.
Core CPI stood at similar levels in March, at 1.8%. Any rise in inflation will increase the chances of a rate hike by the BOE, assuming Brexit is resolved, which is a big if.
GBP/USD Spikes to 1.2800 Resistance - Technical Analysis
GBP/USD is gaining support after the stay bearish throughout the last week. The major supports on the lower side are seen around 1.2700 figure, 1.2670 swings low and 1.2550 level.
GBP/USD is testing the 1.2800 level and the 200 SMA. The traders will apparently continue blending in the 1.2700-1.2800 zone ahead of any significant movement in either direction. However, bulls seem to have regained some modest ground.
Support and Resistance
Key Trading Level: 1.2735
A break over 1.2800 the figure can point to 1.2880 resistance. Next support is at 1.2740 and 1.2860 level.
GBP/USD - Trade Tips
Consider staying bearish below 1.27460 as the GBP/USD can go after 1.2630 only if it manages to hold below 1.2760 resistance. All the best!