- Brexit jitters return to markets, send pound broadly lower.
- Stalled USD selling also caps the upside in Cable, as the focus remains on Brexit headlines.
The offered tone around the pound is seen growing bigger in the mid-European session, knocking-off the GBP/USD pair back towards the 1.32 handle, as Brexit jitters claw back in anticipation of a big statement likely to be announced by the UK PM Theresa May shortly. However, the sources from the UK PM Office denied any such announcement happening from May.
The latest Brexit-chatter doing the rounds suggest that the PM May is seeking to staunch fallout from the EU summit, the UK Senior Minister noted that PM will have to re-write her Chequers Brexit plan.
More so, a tepid recovery attempt seen in the US dollar across its main competitors from 2-week lows also collaborated to the renewed weakness in Cable. Also, downbeat UK public sector net borrowings data added to the weight on the spot.
In the day ahead, the Brexit-related headlines will continue to have a significant impact on the pound, as the US data is likely to have virtually no impact on the dollar trades.
GBP/USD Technical Levels
Slobodan Drvenica at Windsor Brokers noted: “Pullback from new 2 ½ month high at 1.3297 could extend as profit-taking and softer tone on the latest news, as well as reversal of daily slow stochastic from overbought territory, weigh on near-term action. Initial support at 1.3213 (former high of 26 July) has been cracked, with extended dips expected to find ground above broken 100SMA (1.3157), to keep bulls intact for renewed attempt above 1.3280 barrier and possible extension towards 1.3362 (09 July high). Negative scenario sees break below 100SMA as initial bearish signal, with extension and weekly close below rising 10SMA (1.3121) needed to put bulls on hold. Res: 1.3280; 1.3297; 1.3362; 1.3400. Sup: 1.3214; 1.3188; 1.3157; 1.3121.”
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