GBP/USD on the way to 1.4000 or back towards 1.3730?

• GBP/USD to break up to 1.4000?
• Will Senate clinch a deal?

GBP/USD has been capped on its rally with some profit taking as traders await details around developments of the US government shutdown. Currently, GBP/USD is trading at 1.3943, up 0.58% on the day, having posted a daily high at 1.3972 and low at 1.3857.

Senators failed to come to an agreement to end it late Sunday night and a vote was scheduled for noon Monday that would end the shutdown with a short-term spending bill that would last three weeks.  However, as Cameron Joseph for TPM writes, " Senate Democrats are on the brink of accepting a deal to end the government shutdown in exchange for the promise of a vote on the DREAM Act in the coming weeks, three sources tell TPM," the article read which has given the dollar a little boost at the time of writing. We await the outcome of the vote that is to take place at 19 GMT. 

Meanwhile, the US dollar has been under immense pressure for a number of sessions and has been trading within a range of between 90.3620-90.6980 so far today, currently positioned at 90.42.  Sterling, on the other hand, has been better bid since finding traction on the 1.38 handle in recent sessions.

Sterling price action

Cable rose to an intra-day high of 1.3915 during the European morning session while in Asia, the range was between1.3857-1.3899 was Asia range and 1.3837 was Friday's low. GBP/USD picked up the pace from 1.3885 in NY AM until meeting offers through 1.3950 as a mooted option barrier level and the 19-month double-day highs last week. If the Senate fails to clinch another deal, that level will be under pressure ahead of UK jobs this week as the main scheduled event for the pound. 

GBP/USD levels

"Various intraday divergences suggest consolidation ahead of a move to psychological resistance at 1.40," argued analysts at Commerzbank. "We note the 13 count on the weekly chart and are wary of failure here. The market stays immediately bid above the 1.3512 2 month uptrend. We would allow for a retracement to 1.3730/1.3600. Critical support is the 1.3318 2016-2018 uptrend," the analysts added.