GBP/USD: Bulls looking to test 1.3150, eyes on UK, US politics

• DXY meets fresh supply as risk-off seeps back.
• Brexit uncertainty to keep the recovery limited.
• US tax reforms – next risk event.

The GBP/USD pair extends its bounce from just ahead of 1.31 handle into early European trading, as broad-based USD selling persists amid worries over the US tax reform plan.

GBP/USD regains 5-DMA at 1.3134

The bulls have regained poise over the last hour, taking the spot back towards the midpoint of 1.31 handle, as sentiment around the greenback continues to remain dented by the US tax reform uncertainty, with all eyes set on the proposed tax plan scheduled to be announced in the day ahead.

However, it remains to be seen if the major manages to sustain the recovery mode above 1.3100 levels, as a fresh round Brexit negotiations begins between the EU and UK later today, especially in light of the EU having given Britain 2-3 weeks to make the Brexit offer.

Meanwhile, amid a lack of key macro news from the UK docket today, the GBP/USD pair will track the USD price-action, which will be mainly driven by the US politics.

GBP/USD Technical View

Jim Langlands at FX Charts, writes: “The momentum indicators remain in neutral, so a cautious stance is required and further choppy trade near current levels would not really surprise although a break of the session low of 1.3085 would then allow a move to the previous lows at around 1.3030 and then to 1.3000. On the topside, resistance will be seen at 1.3150 and again at 1.3175. Above here looks unlikely, but if wrong, look for a move back to 1.3200+, possibly towards 1.3225/50.”