GBP/USD stabilizes at around 1.3550 as USD struggles to rebound

GBP/USD stays near intraday highs, stable at around 1.3550 in the second half of the day on Monday. The uncertainty surrounding the outcome of the US-China trade talks on Tuesday causes investors to remain on the sidelines and limits the pair's volatility.

GBP/USD Technical Overview

GBP/USD closed the last 4-hour candle above the 20-period Simple Moving Average (SMA) on the 4-hour chart and the Relative Strength Index (RSI) indicator rose toward 60, reflecting a buildup of bullish momentum.

On the upside, 1.3600-1.3615 (static level, multi-year high set on June 5) aligns as the first resistance area before 1.3700 (round level, static level) and 1.3800 (upper limit of the ascending regression channel).

Looking south, support levels could be seen at 1.3520 (50-period Simple Moving Average(SMA), static level), 1.3480 (100-period SMA) and 1.3380 (Fibonacci 23.6% retracement level of the latest uptrend).

Fundamental Overview

The US Dollar benefited from the May labor market data on Friday and didn't allow GBP/USD to build on its weekly gains. The US Bureau of Labor Statistics reported that Nonfarm Payrolls increased by 139,000 in May, surpassing the market expectation of 130,000. Additionally, the Unemployment Rate held steady at 4.2%, as forecast.

The economic calendar will not offer any data releases that could impact the USD's valuation on Monday. However, news coming out of the next round of US-China trade negotiations, which are scheduled to take place later in the day in London, could trigger a big reaction in GBP/USD.

In case investors turn optimistic about the US and China moving toward resolving trade-related issues, the USD could gather strength with the immediate reaction and cause GBP/USD to correct lower. Conversely, markets could grow concerned about a downturn in the US' economy if sides fail to offer any encouraging developments. In this scenario, the USD could stay under selling pressure and help the pair to continue to stretch higher.