GBP/USD - Recovery continues, focus on German politics and Brexit

• GBP/USD is back above 1.32  
• Focus on German politics and Brexit.

GBP/USD has recovered more than 50% of its intraday losses but is struggling build momentum above 1.32 levels.

Focus on German politics

The collapse of the German coalition talks and the resulting action in Asia (weak EUR, GBP) clearly indicates that investors fear "all major decisions, including Brexit negotiations" could be put on hold till the situation in Germany is sorted out.

Thus, GBP could remain under pressure in Europe. The data calendar is light, but BoE Deputy Governor David Ramsden, who voted against the rate hike earlier this month, will deliver a speech at 6:30 pm GMT. Ramsden would most likely talk down the need to hike rates in the short-term. Also, the action in the treasury yields could offer clues to Cable traders.

GBP/USD Technical Levels

Jim Langlands from FX Charts writes - "Overall, the momentum indicators are still in neutral, so a cautious stance is required and it is wise to stand aside (although I remain long GbpAud). On balance, I still think Cable could grind higher in the days ahead, although any negative Brexit headlines will see a rapid move to the downside, but for Monday, further choppy trade near current levels would not really surprise.

On the topside, resistance will again be seen at 1.3260, above which 1.3275/1.3300 would find good offers although I doubt we see it up here today.

On the downside, support will be now seen at 1.3170, 1.3150 and at 1.3135 ahead of the rising trend support low at 1.3100. I remain neutral, possibly very cautiously bullish. Note that the Autumn Budget Statement takes place on Wednesday."