GBP/USD analysis: Brexit-drama takes its toll on Pound

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3339

GBP/USD at weekly lows as Brexit deal seems fragile.
UK inflation, employment and BOE meeting, to rock the pair.

The GBP/USD pair edged lower this Monday, as the Brexit-drama offset broad dollar's weakness. The pair started the day with a positive tone, hitting 1.3430 during Asian trading hours, but pulled down all the way to 1.3342 early London, following words from Brexit secretary David Davis. Among other things, Davis said that the government won't pay the agreed Brexit divorce bill if no future trade deal is agreed by March 2019. During the weekend, Davis said that that "it was much more a statement of intent than it was a legally enforceable thing," when referring to the Irish border issue within the Brexit deal, although later retracted, blaming newspapers from misreporting what he said. UK PM May updated the Parliament on the Brexit deal terms in the House of Commons later in the day, saying that "nothing is agreed until everything is agreed." The UK macroeconomic calendar will be quite busy this week, starting with November inflation this Tuesday, employment figures on Wednesday, and the BOE meeting next Thursday.

Late US session, the pair broke lower and trades at fresh lows near 1.3330, its daily low. Technically, the risk is toward the downside according to the 4 hours chart, as the price was unable to regain ground above a bearish 20 SMA, now breaking through a major support, the 61.8% retracement of its late November bullish run. Indicators in the mentioned chart head lower within negative territory, also supporting a bearish extension towards 1.3300, en route to 1.3260, once the first gives up.

Support levels: 1.3300 1.3260 1.3220

Resistance levels: 1.3345 1.3380 1.3420

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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