GBP/USD eyes daily lows after Johnson’s resignation

• Pound drops across the board after Jo Johnson resigns as transport minister.
• GBP/USD eyes daily lows, back into negative territory for the week.  

The GBP/USD pair spiked to 1.3055 but turned to the downside and accelerated the decline toward daily lows following the resignation of Jo Johnson, Transport minister, brother of Boris Johnson. He quit over Brexit and weakened the pound.  

Cable dropped to 1.3010, approaching the 1.3000 area and daily lows. Earlier today, GBP/USD bottomed at 1.2987, the lowest level since Monday. The recovery from the lows was short-lived and it was back under pressure. While GPB/USD eyes daily lows, EUR/GBP printed a fresh daily high at 0.8725.  

“Sign of a Brexit deal completion is expected to support Sterling while Brexit deal negative news weighs on its value. Although a great set of the UK data is scheduled for the next week with inflation and wages in the UK rising, with Brexit deal nowhere at sight Sterling is likely  to remain heavy”, said Mario Blascak, FXStreet’s Editor-in-Chief.  

Levels to watch  

GBP/USD dropped sharply during the last two days, erasing weekly gains. The price fell back below the 20-week moving average, ending far from the weekly top, a signal that could anticipate further losses for the beginning of next week.  

The daily chart shows a key support at the 20-day moving average at 1.2985. Below that level attention would turn to 1.2940 and then 1.2900. If GBP/USD managed to hold above 1.2985 it could correct higher. Resistance levels are seen at 1.3070 and 1.3130. A daily close above 1.3200 would signal more gained ahead.