GBP/USD analysis: at risk of retesting yearly low on Brexit uncertainty

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2772

UK Consumer Confidence fell for an eleventh consecutive month in November.
BOE's Governor Carney reiterated his warnings about the potential effect on the economy of a no-deal Brexit.

The GBP/USD pair fell to 1.2754 on the back of another round of Brexit headlines, none of them reporting something new. Speculation that there could be a different kind of Brexit deal if the Parliament rejects PM May's plan were erased after EU's Chief Negotiator Barnier said that negotiations are over and that's now the time to ratify the deal. Also, PM May said that the UK will leave the EU next March, whether there's a deal approved or not. Finally, Governor Carney reiterated his warnings about a no-deal Brexit, saying that the kingdom is not prepared for such scenario, adding that if it happens, monetary policy could do little to offset any potential significant hit on the economy. Adding pressure on the Pound, Consumer Confidence fell to 11 months low in November according to CFK, printing -13 from -10 in October. Broad dollar's weakness and soft US data helped the pair to remain afloat, although, by the end of the US session, it has been unable to recover the 1.2800 level.

The pair remained depressed near its daily low, developing well below a daily descendant trend line coming from November high of 1.3166, now at around 1.2850/60, with gains above it looking a bit more encouraging for Pound's bulls. In the 4 hours chart, the pair has settled below a mild bearish 20 SMA, the Momentum indicator hovers around its mid-line, while the RSI is stable around 44, indicating limited buying interest. The downside potential will increase on a break below 1.2724, the weekly low, opening doors then for a slide toward the year low at 1.2661.

Support levels: 1.2755 1.2725 1.2690

Resistance levels: 1.2810 1.2855 1.2900

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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