GBP/USD Forecast: Bearish potential limited, but bull cautious

The GBP/USD pair has remained unchanged just below the 1.2500 threshold on Friday but closed the week with substantial gains. Hopes mixed with fears by the end of the week, as Britons welcomed the reopening of social activities on Saturday. The news overshadowed concerns related to Brexit talks, which broke up early on Thursday, amid serious disagreements between the two parts. Nevertheless, both parts committed to another round of talks this week in London, and market players expect the EU and the UK to reach an agreement on trade by October.

In the data front, the UK saw the release of the final version of the June Markit Services PMI, which was upwardly revised to 47.1 from 47. On Monday, the UK will publish the June Markit Construction PMI, foreseen at 47 from 28.9.

GBP/USD short-term technical outlook

The GBP/USD pair is heading into the weekly opening trading at 1.2482, and with the bullish potential limited, according to the daily chart. The price is hovering around a mildly bearish 100 DMA and below a firmly bearish 20 DMA, while technical indicators have lost their upward strength and turned modestly lower around their midlines. In the 4-hour chart, the pair settled above a congestion of moving averages, while technical indicators remain within positive levels, although with divergent strength. The downside seems limited for now, but the bearish case will likely gain adepts on a break below 1.2400.

Support levels: 1.2440 1.2400 1.2360

Resistance levels: 1.2505 1.2560 1.2600

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