GBP/USD Forecast: Brexit tensions to keep the Pound pressured
|GBP/USD Current price: 1.2336
- UK PM Johnson announced a task force meant to fuel the kingdom’s economic recovery.
- Another round of Brexit talks will take place this Monday.
- GBP/USD technically bearish and heading towards the 1.2200 region.
The GBP/USD pair collapsed Friday, reaching a fresh June low of 1.2314, recovering some modest 20 pips ahead of the close. The decline was the result of the resurgent dollar’s demand on a risk-averse environment, with Wall Street edging firmly lower on the back of soaring coronavirus cases in the US, triggering concerns about a possible economic recovery. The UK didn’t publish relevant data at the end of the week, but over the weekend, news indicated that PM Boris Johnson will announce the creation of a task force designed to fast track and accelerate infrastructure spending and fuel the kingdom’s economic recovery.
In the Brexit front, German Chancellor Angela Merkel warned that the UK must “live with the consequences” of leaving the EU, and PM Johnson threatened to walk away from talks afterwards. Britain is prepared to leave on “Australia terms,” according to Downing Street if they can reach an agreement with the Union. Australia does not have a trade deal, but a series of mini-deals, which for the UK will result pretty much the same as leaving the EU without a deal. This Monday, the UK will publish money data from May. Representatives from both economies will resume talks this Monday.
GBP/USD short-term technical outlook
The daily chart for the GBP/USD pair indicates that there is still room for further declines, as the pair has remained below all of its moving averages throughout the week, while technical indicators head firmly lower within negative levels. In the 4-hour chart, the bearish case is also strong, as the pair has accelerated its slump once breaking below the 200 SMA, now below all of its moving averages, while technical indicators maintain their bearish slopes near oversold levels.
Support levels: 1.2315 1.2270 1.2220
Resistance levels: 1.2365 1.2410 1.2460
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