GBP/USD finds support above 1.2200, holds a bearish intraday bias
|- Cable extends slide toward 1.2200, rebound losses momentum around 1.2240.
- US data ignored, the focus remains on US/China trade tensions.
The GBP/USD pair dropped further after the beginning of the American session and bottomed at 1.2206, amid a stronger US Dollar against European majors and the yen. From the lows it rebounded and as of writing was trading at 1.2225/30, 60 pips below Friday’s close.
Between Brexit and trade wars
Market participants ignored the better-than-expected US Durable Goods Orders report as attention remains on trade tensions. US President Trump spoke about the situation several times today, and he could continue to do so.
GBP/USD dropped further over the last hours as tensions eased when leaders from both countries mentioned the possibility of resuming talks. Still, new tariffs remain set to start in less than a week.
Regarding the Pound, its all about Brexit. Over the last few days, there has been no breakout in the relationship between UK PM Johnson’s administration and EU leaders. Preparations for a hard Brexit weigh on the Pound. It was reported earlier today that Johnson had sought legal advice from the UK attorney general on the possibility of avoiding the Parliament to prevent MPs from seeking an extension to Brexit.
Levels to watch
The rebound from the lows lost strength, and the daily bias still point to the downside, favoring a correction from the four-week low it reached on Friday at 1.2290.
On the flip side, the 1.2202/06 area is key support (20-SMA in four hours chart and daily low), and then comes 1.2175 (Aug 20 high) and 1.2110. To the upside, immediate resistance levels might be seen at 1.2255/60 and 1.2290.
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