GBP/USD recently turned extremely volatile and corrective while pushing towards 1.3400-1.3500 resistance area amid an impulsive bullish trend. Ahead of BREXIT, the market sentiment on GBP is indecisive and confused, while USD is also struggling to maintain momentum.

After two and half years of negotiations with the European Union, the BREXIT scenario is still uncertain. There are different options like a delay, a departure from the EU with Prime Minister Theresa May's deal, a disorderly exit without any deal or another scenario. Prime Minister May called on BREXIT supporters to validate her deal by a European Council Summit. Otherwise, BREXIT may face a delay beyond June 30, 2019. As the recent vote passed on behalf of May, traders are gaining confidence with GBP.

Today UK Average Earning Index report is going to be published which is expected to decrease to 3.2% from the previous value of 3.4%, Unemployment Rate is expected to be unchanged at 4.0%, and Claimant Count Change is expected to have a positive result with a decline to 13.1k from the previous figure of 14.2k. Ahead of CPI data tomorrow which is expected to be unchanged at 1.8%, GBP is expected to maintain momentum.

On the USD side, the currency has lost ground versus GBP which is leading the price higher in a volatile manner. USD is likely to trade with higher volatility ahead of the FOMC policy update. The US central bank is widely expected to leave the official funds rate unchanged at 2.50%.

Currently the Federal Reserve advocates for a cautious approach towards monetary policy that means a pause in the cycle of monetary tigthening in 2019. However, in 2020 if the US economy does not develop as planned, the regulator could resort even to rate cuts. Previously, some FED officials signaled that the key interest rate could increase to 3.00% to 3.50% with at least 2 rate hikes this year. However, under current economic conditions, the domestic economy is not ready for higher interest rates. The US economy is showing mixed economic results, for example, soft employment growth with rising wages. Recently US NAHB Housing Market Index report was published unchanged at 62 which was expected to increase to 63. Today US Factory Orders are expected to increase to 0.3% from the previous value of 0.1%.

Meanwhile, GBP is expected to gain further momentum over USD ahead of BREXIT. However, the UK departure from the EU is expected to lead to severe GBP weakness despite USD waning momentum.

Now let us look at the technical view. The price is currently heading towards 1.3400-1.3500 resistance area while forming a Bearish Divergence along the way and signaling upcoming bearish momentum from a strong price area. The price showed a bearish rejection yesterday with a daily close residing inside the bullish mother bar which broke above 1.3100 area with a daily close. Currently the price is expected to climb towards 1.3400-1.3500 area from where the price could reject bulls under bearish pressure during a BREXIT decision week. As the price remains below 1.3500 area, this price move could invite bears.