GBP/USD: Bulls and bears jostle around latest lows amid Brexit pessimism
|- Brexit pessimism confronts technical indicators near the key 1.2600 support.
- Economic calendar also gains importance.
Even if the ever increasing Brexit uncertainty continues to haunt the British Pound (GBP), oversold RSI and a ray of optimism before next week’s parliament discussion limit the GBP/USD pair’s moves around 1.2630 ahead of the London open on Thursday. Today’s speech by the Bank of England’s (BOE) Deputy Governor David Ramsden and the US data will be the key to watch.
Having witnessed British voters’ favor to Brexit during recent EU election, top-line UK lawmakers have rolled their sleeves up to offer signals for an ideal Brexit proposal that they will support during the next week’s parliament discussion over the issue.
Majority of the British politicians have been against the hard Brexit and a departure by October 31 deadline. However, opposition Labour party leader Jeremy Corbyn’s emphasis on a second referendum and the Foreign Minister Jeremy Hunt’s insistence of revised or no backstop might disturb the proceedings.
Other than Brexit, trade tensions surrounding the US and China have also played their role in fueling market uncertainty.
While BOE’s Ramsden could offer some insights on how the central bank could act in case of a hard Brexit, the US first quarter (Q1) gross domestic product (GDP) and personal consumption data might portray a soft picture of the world’s largest economy.
The US GDP is expected to take a step back to 3.1% from 3.2% if observing annualized figures whereas personal consumption expenditure prices and core personal consumption expenditure might remain unchanged at 0.6% and 1.3% respectively.
Technical Analysis
With the 14-day relative strength index (RSI) indicating oversold conditions, pair’s pullback to 1.2660 and then to a week-long resistance-line at 1.2700 can’t be denied. Though, 1.2760 and 21-day simple moving average (SMA) level of 1.2840 could gain bulls attention then after.
Alternatively, multi-month lows near 1.2600 hold the quote’s downside confined, a break of which can drag prices to 1.2480 and then to 2019 low near 1.2430.
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