GBP/USD struggling to hold above 1.2800 as Brexit turns bearish... again
|- The new week opens on thin trading, but risk appetite headed towards the downside.
- The latest Brexit proposal has seen PM May lose yet another Brexit Secretary following Dominic Raab's resignation last week.
GBP/USD is trading flatly just north of 1.2800 heading into London's Monday market session with Brexit concerns once again coming into full view of market participants.
“Make it-or-Break it” time for Sterling and Theresa May
This week brings the UK's latest Inflation Report Hearings, but with the key reading not due until Thursday, the early week is left to fend for itself against a constant stream of Brexit headlines that have once again turned bearish. Tory Brexiteers are approaching the number of signed letters needed to call an immediate no-confidence vote in current UK Prime Minister Theresa May, and unverified sources have warned that PM May may encourage a stock market crash should she lose the first round of a no-confidence vote. Elsewhere, PM May's latest Brexit proposal has made it out of the EU and passed May's own cabinet, but the next hurdle remains the upcoming EU Brexit Summit, as well as the UK's own House of Commons, where a growing number of Eurosceptics are already promising to vote down the proposal regardless of content.
Markets are seeing an evaporation of risk appetite to kick off the new trading week, and a lack of meaningful data for the early half of the week leaves traders fully exposed to what is sure to be a volatility-heavy flow of risk-off headlines as PM May struggles to keep the wheels on her Brexit cart.
GBP/USD levels to watch
According to FXStreet's own Mario Blascak, PhD: "the GBP/USD currency pair continues to slide lower in a downward sloping trend on a daily chart. The daily swings are massive over the course of last three days with daily ups and downs of 1% framed by 1.2722 on the downside and 1.3070 on the upside while the currency pair settled at around 1.2800. With Brexit deal about to be approved, the potential for the upside mounts as the Momentum and the Relative Strength Index both remain in the neutral while pointing upwards. The Slow Stochastics sliding lower in the neutral territory. Moreover, the golden cross of a 50-day moving average crossing over a 100-day moving average to the upside was formed on a daily chart indicating final trend reversal targeting 1.3060 before moving to 1.3380 and 1.3460 important Fibonacci level. Failure of Brexit deal to materialize should see GBP/USD fall towards 1.2660 first before testing 1.2100, the post Brexit referendum low before the upward correction started back in March 2017."
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