The latest UK political jitters, to some extent, were negated by the US tax bill uncertainty, with the GBP/USD pair once again finding some buying interest near the 1.3085 area. The US Dollar reacted negatively to the Senate’s version of the tax plan, which confirmed that they wanted to delay corporate tax cut by a year. The pair, however, remained within a familiar trading range and lacked any strong conviction amid prolonged concerns over the lack of progress on Brexit talks.
On Friday, the UK economic docket features the release of manufacturing and industrial production, along with goods trade balance data, which might produce some volatility around GBP crosses. The NIESR will release an update on the UK’s GDP outlook and the Prelim UoM Consumer Sentiment index from the US will also be looked upon for some short-term trading opportunities.
Technically, the pair lacks any firm directional bias, with the 1.3175-80 region acting as an immediate strong hurdle. Even if the pair manages to clear this immediate barrier, further up-move beyond the 1.3200 handle is more likely to be capped at the 1.3225-30 supply zone, also nearing 50-day SMA.
On the flip side, the 1.3100-1.3085 region remains the immediate strong support to defend, which if broken is likely to accelerate the slide towards a short-term descending trendline support, currently near the 1.3020 region. A convincing break below the mentioned trendline support would confirm a fresh bearish break and turn the pair vulnerable to slide further in the near-term.