GBP/USD: 1.40 in reach as Powell testimony looms

• GBP/USD tumbled from 1.4070 on Monday, but a foothold seems to have been found.
• Fed chair Powell testimony today, Brexit outline Friday promises busy week for Sterling traders.

The GBP/USD pair is middling quietly ahead of the London markets, trading around the 1.3960 level after hitting the brakes on Monday's decline from 1.4070.

The Sterling will see a busy day on Friday when Prime Minister Theresa May gives a speech where she will set out her Brexit plan and outline the negotiating position for the UK following Brexit, which begins next March. PM May has come under fire from within her own ruling Conservative party lately, facing accusations of sacrificing UK sovereignty in order to appease European Union (EU) leaders in Brussels.

Before Friday though, Sterling can expect some volatility as markets shift under the weight of Fed chairman Jerome Powell's congressional testimony today before the House Finance Committee. The congressional hearing marks chairman Powell's first major appearance after taking the reins from Janet Yellen, and his words will be watched closely by market participants. Chairman Powell is slated to begin his testimony at 15:00 GMT.

The economic outlook for the UK continues to brighten, and with surprisingly hawkish comments from Bank of England (BOE) members last weekend, the BOE looks set to begin raising interest rates in short order. Even with continued Brexit concerns hanging over the Pound Sterling, the optimistic outlook and aggressive stance of the BOE is providing a structural base for the GBP, as a recent recovery in Greenback bidding has done little to drive the GBP/USD pair off of its hinges.

GBP/USD Technicals

Bullish potential remains strong in the pair, and the Sterling looks set to recapture the 1.4000 key handle if buyers can successfully fight off the bears to reclaim the psychological level. The Cable is still trading well above the 200-day SMA and has found support recently from the 34 EMA, though the triangle forming on H4 charts could spell out a new interim bearish trend if the pair manages to break convincingly below 1.3920. Intraday levels for Tuesday's trading session see 1.3924 and 1.3900 acting as support, while resistance currently sits at 1.4000 and 1.4025.