GBP/USD analysis: May cornered in her own trap
|GBP/USD Current Price: 1.3079
- Odds for a hard Brexit have increased as the EU won't grant May's desired extension.
- BOE left monetary policy unchanged, repeated it's prepared to react to whatever Brexit scenario.
The GBP/USD pair collapsed to 1.3003, bouncing from the level some 40 pips ahead of the close, with mounting Brexit tensions overshadowing a BOE meeting. The UK Central Bank maintained its monetary policy unchanged as expected, while the statement was pretty much unchanged from the previous one, remarking that rates could move in either direction in the case of a no-deal Brexit. Regarding this last, the departure date is now the center of attention. According to the latest market talks, the EU could grant the UK an extension up to May 22, not June 30 as PM May pretends, and that only in the case MPs approve a withdrawal agreement next week. The reason behind this short extension is that the UK does not intend to participate in European elections. In this scenario, odds of a hard Brexit increased substantially, as nor May, neither MPs are willing to change their stances.
The pair is short-term bearish according to the 4 hours chart, as it found stability well below a bearish 20 SMA, also below the 200 EMA, this last at around 1.3110. Technical indicators in the mentioned chart have lost their upward strength after reaching oversold levels, now consolidating around these last and by no means suggesting the slump is over. The main support now comes at 1.2960, where the pair bottomed in March and a level that can easily be taken away should Brexit tensions escalate.
Support levels: 1.3000 1.2960 1.2915
Resistance levels: 1.3075 1.3110 1.3150
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