GBP/USD analysis: Brexit chaos unwound, UK government shaken

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2765

UK Brexit Secretary Raab resigned, followed by several other members of the government.
GBP/USD nosedived on Brexit, May's future uncertainty.

Chaos is the only word capable of describing what's going on in the UK. The enthusiasm about a Brexit deal from 24 hours ago is just an old memory. After PM May announced her cabinet agreed the latest deal approved by the EU, Brexit Secretary Dominic Raab resigned. " I cannot in good conscience support the terms proposed for our deal with the EU," he said. His decision was followed by several other ministers and ministerial aides, multiple criticisms from fellow party members and opposition. Chances that the deal will pass the Parliament are pretty much null, as it fell way short of Brexit promises. The GBP/USD collapsed, losing over 250 pips ever since Raab quit. Furthermore, a no-confidence letter was sent to the Parliament. 48 letters are the magic number that could put May outside the UK Government.

Adding to Sterling woes, UK Retail Sales missed expectations, in October, decreasing 0.5% when compared to the previous month, rising by 2.2% YoY. There are no macroeconomic news scheduled in the UK for Friday.

The GBP/USD pair was again subject of high volatility throughout the day. It traded as low as 1.2729, its lowest for this November, recovering just modestly from such low ahead of the close, still well below the 1.2800 level. Technical readings are now aligned with the fundamental background, something that implicates a steeper decline ahead. The 4 hours chart shows that the battle around the 200 EMA was lost by bulls, with the pair now roughly 200 pips below it, also below a bearish 20 SMA. Technical indicators in the mentioned chart maintain their strong bearish slopes near oversold readings. A break through the mentioned daily low, exposes 1.2690, October monthly low, while below this one, 1.2661, the year low posted last August comes next.

Support levels: 1.2730 1.2690 1.2660

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.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.