GBP/USD: Will it close the bearish gap ahead of a Big week?

A volatile start to a fresh week for GBP/USD so far, with the spot witnessing two-way businesses, as markets react to the weekend’s headlines on the UK politics.

GBP/USD bounces-off 1.2975

The spot kicked-off the week with a bearish opening gap, knocked-off to 1.2995 from 1.3040 levels after the UK PM May and Brexit minister Davis took a tough stand on the Brexit negotiations, threatening to quit Brexit talks if it faces massive bill of a EUR 100 billion.

However, the bulls were immediately rescued by risk-on moods persisting in Asia, sending the rate back to 1.3025 levels, before meeting fresh supply amid resurgent broad based US dollar demand. Subsequently the pair took a sharp U-turn and dipped to 1.2975, daily lows.

Over the last hours, the major is seen consolidating the recovery from 1.2975, although remains capped near 1.30 handle, as recent outcomes of the opinion polls on the UK election continue to weigh down on the pound.

Survation and YouGov poll published over the weekend showed that the Conservatives Party is losing popularity as we inch closer towards the snap elections scheduled on June 8.  Survation poll revealed support for Conservatives stood at 46% of the vote versus 48% seen last Monday.

Looking ahead, politics surrounding the UK and US are likely to dominate markets this week, besides the UK GDP, inflation report hearings and FOMC minutes will also have a major impact on the spot in the week ahead.

GBP/USD Levels to consider            

Valeria Bednarik, Analyst at FXStreet noted: “In the 4 hours chart, the 20 SMA  also provides support, in this case around 1.2960, while technical indicators head nowhere within positive territory. There's a strong static resistance around 1.3060, the level to surpass to see the pair adding some pips, at least short term. Support levels: 1.2995 1.2960 1.2920 Resistance levels: 1.3060 1.3100 1.3135.”