GBP/USD drops below 1.31 as Fed minutes exacerbated Brexit uncertainty
|- Fed minutes affirmed central bank's hiking bias, compounding Brexit woes.
- Brexit negotiators continue to struggle for a breakthrough on key matters, particularly Irish border issue.
- The pair risks falling to nine-day lows below 1.3083.
The GBP/USD is feeling the pull of gravity courtesy of hawkish Fed minutes and Brexit uncertainty.
The greenback is better bid in Asia as the Fed minutes released in the overnight trade showed growing consensus at the Fed that interest rates would need to rise above the neutral level of 3 percent (in the restrictive territory).
Moreover, the bearish impact of the Brexit uncertainty has been exacerbated by the hawkish Fed minutes.
Indeed, Brexit negotiations are being held in a positive atmosphere, however, there does not appear to be any breakthrough on key problems, primarily the Irish border issue. Further, the 5-day and 10-day EMAs are beginning to roll over in favor of the bears.
As a result, the currency pair could drop to nine-day lows below 1.3083 and may find acceptance under the 50-day exponential moving average (EMA), currently lined up at 1.3078 if the UK retail sales data, due today at 08:30 GMT, prints below estimates.
GBP/USD Technical Levels
Resistance: 1.3129 (5-day EMA), 1.3151 (100-day EMA), 1.3193 (previous day's high)
Support: 1.3078 (50-day EMA), 1.30 (psychological level), 1.2921 (Oct. 4 low)
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