GBP/USD headed back towards 2018 lows/key Fib support level
|- GBP/USD has been heading below the 21-hr SMA at 1.2951 and back on track for 2018 lows.
- Set on a southerly trajectory on political angst over no-Deal Brexit concerns following both Carney's and Fox's no-deal warnings.
- A bearish break opens risk right the way down to the August 2017 low at 1.2773.
GBP/USD has been heading below the 21-hr SMA at 1.2951 and is set on a southerly trajectory on political angst over no-Deal Brexit concerns following both Carney's and Fox's no deal warnings from Friday and Sunday respectively - 1.2920 was Monday's 11-month low after Fox's 60 pct no deal Brexit estimate and this area remains vulnerable so long as the greenback gathers up commitment form the bulls again after this current long squeeze.
GBP/USD is currently trading at 1.2942 having made a high of 1.2977 on the recovery from aforementioned 1.2920 lows - today's low has been 1.2937. The pound will be at the mercy of such talk more so now that the BoE has been quite clear of the rate trajectory for the foreseeable future, and while economic data will be monitored, it is unlikely to impact the MPCs decision making when it comes to setting the benchmark rate until 2019 - in fact, the most recent data has suggested that the U.K. economy might be experiencing a temporary slowdown which underpins such a dovish notion.
No Brexit agreement - Brussels committed to “the purity of the EU’s ideology”
In short, the International Trade Secretary for the UK, Liam Fox, explained that "the risk of no agreement is being increased by those in Brussels committed to “the purity of the EU’s ideology”. For Sterling, risk reversals are telling which highlight the GBP put versus GBP call vol premium in GBP/USD options is at their highest since early 2017 - even surpassing the high premiums seen before the June 2017 elections. Meanwhile, markets will now look to this weeks reading for UK Q4 GDP data that will come on Friday and bulls will be hoping for a positive outcome that could give the pound some much-needed demand.
GBP/USD levels
The Fibonacci support at 1.2918, (50% retracement of the move up from 2016) where the low was recently made is up for grabs again. A break there opens risk right the way down to the August 2017 low at 1.2773. On a break of the channel's resistance, however, 1.3200 guards the 50-D SMA - this is now located at 1.3212 ahead of 1.3461/80 that comes before the convergence of the 200-D SMA (1.3581) and 1.3597/1.3600. The 1.3708 level at the 50% Fib of 1.3040-1.4377 remains compelling on the wide.
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