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GBP/USD coiling around 1.2780 as markets head into Trump-Xi G20 headliner

  • G20 summit draws the broader market's attention as traders await Trump-Xi headlines, with many hoping for a peaceable, successful trade discussion between the two leaders.
  • UK data remains thin for Friday, and even Brexit headlines will be playing second fiddle with G20 overhead.
GBP/USD is moving sideways at the 1.2780 level as markets gear up for this weekend's G20 summit, where traders will be keeping their eyes peeled for headlines coming out of the Trump-Xi sideline meeting set to take place on Saturday. Brexit concerns that have plagued the Sterling for months have been shelved for the time being, but the UK's House of Commons vote on Prime Minister Theresa May's Brexit proposal still waits around the corner, slated for December 11th.

The Group of 20 Leaders' Summit kicks off today in Buenos Aires, where the broader market focus will be settled almost entirely on the planned meeting between US President Donald Trump and China's Xi Jinping, with the two leaders expected to discuss the current impasse on trade that the two countries face following several volleys of trade tariffs hurled at each other over 2018; tensions remain high with President Trump set on increasing Chinese tariffs to 25% across the board in January,  and market participants remain concerned that escalating trade rhetoric may be the only result of the high-profile meeting.

The GBP/USD pairing is enjoying a brief reprieve from Brexit jitters that have kept the major pairing hobbled for several months as trade talks between the UK and the European Union came in under the wire, with PM May and the EU agreeing to a last-minute Brexit plan that still had wet ink heading into the EU's recent Brexit summit, and now the next major roadblock has appeared on the horizon: a contested parliamentary vote within the UK's House of Commons on whether or not to accept PM May's/EU Brexit proposal, and concerns remain that May's camp may not have the votes required to see the current proposals into the next stage.

GBP/USD Levels to watch

With market tensions remaining at elevated levels, both within and outside of the United Kingdom, upside potential for the GBP/USD remains limited, and as noted by FXStreet's own Valeria Bednarik: "in the 4 hours chart, the pair has settled below a mild bearish 20 SMA, the Momentum indicator hovers around its mid-line, while the RSI is stable around 44, indicating limited buying interest. The downside potential will increase on a break below 1.2724, the weekly low, opening doors then for a slide toward the year low at 1.2661."

 Support levels: 1.2755 1.2725 1.2690

Resistance levels: 1.2810 1.2855 1.2900