- Sterling is holding a soft stance ahead of Tuesday’s major market sessions, with Brexit weighing heavily on the GBP.
- Brexit concerns are again at top of the worry pile, with the concept of a hard Brexit beginning to firm up into a grim reality.
The GBP/USD is continuing to struggle near 1.3090 as the new trading week sees the Sterling on the softer side amidst rising fears of a hard Brexit and disappointing economic data for the UK that casts doubt on an expected Bank of England (BoE) rate hike in August.
The latest Brexit proposal, crafted by Prime Minister Theresa May and hotly debated within the UK’s parliament, is dead in the water after a flat rejection by the European Union, and Brexiteers in London are back to the drawing board on how to avert a hard Brexit scenario, with the new Brexit minister accusing Europe of stonewalling the negotiation process in hopes of forcing the UK to “blink”. PM May has also shot down suggestions of another Brexit referendum as the sides continue to remain at loggerheads on how the UK is to leave the union, with hard-line leavers seeking massive exemptions and special circumstances from the European Union, with EU leaders in Brussels unmoved by the UK’s current negotiating strategy.
GBP/USD struggling to hold 1.31 as Brexit weighs on Sterling traders, eyes on US PMI
Tuesday’s London market session will be seeing overall market sentiment in control of the GBP/USD’s direction, with a thinned-out macro calendar for the GBP, though the upcoming US session sees American Markit PMIs dropping at 13:45 GMT, and traders will be looking for a healthy dose of volatility to spur the Sterling-Dollar pair into action.
GBP/USD Levels to watch
It’s quickly becoming move-or-get-off-the-pot time for Sterling bulls, and buyers are either going to have to make a push for the 1.3200 major handle, or allow the Sterling to fall into fresh yearly lows, and as FXStreet’s own Haresh Menghani noted: “looking at the technical picture, the pair is retreating from 50% Fibonacci retracement level of the 1.3363-1.2957 recent downfall and has been trending lower alongside a descending channel formation on the 1-hourly chart. A follow-through weakness below the 1.3080-75 immediate support is likely to accelerate the fall towards 23.6% Fibonacci retracement level support near 1.3050 area en-route the key 1.30 psychological mark. A convincing break back below the 1.30 handle might now turn the pair vulnerable to resume with its prior depreciating slide and aim towards testing the 1.2900 round figure mark, representing 61.8% Fibonacci retracement of the recent decline and subsequent rebound.
On the flip side, momentum back above 1.3110-15 area (38.2% Fibonacci retracement level) could assist the pair to make a fresh attempt towards clearing an important hurdle near mid-1.3100s. A decisive breakthrough the mentioned barrier now seems to pave the way for an extension of the recovery move further towards reclaiming the 1.3200 handle.”
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