GBP/USD analysis: Brexit jitters keeping the Pound in the sell side

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2742

The UK November Markit Manufacturing PMI will be out Monday, foreseen at 51.5.
Labour MPs will call for a no-confidence vote on PM May if her Brexit plan can't pass Commons.

Brexit uncertainty kept pressuring the Pound, with the GBP/USD pair down for a second day in-a-row Friday to close the week in the 1.2740 price zone. A bout of dollar's strength, as the FOMC Minutes partially offset Fed Powell's dovish comments about rates, completed the picture. On Brexit, Britons keep discussing whether or not to approve the deal and possible alternatives to it, EU authorities repeat that the deal signed November is the only possible deal. Chances that the UK Parliament will vote May's plan are low, and to add fuel to the fire, Sam Gyimah, the UK Minister of Science and Universities, resigned in opposition to the agreement. Over the weekend, news coming from the kingdom showed that Labour MPs will call a motion of no-confidence if PM May can't get to pass the deal through Commons. The GBP will suffer another challenge this Monday in the form of the November Markit Manufacturing PMI, foreseen at 51.5 vs. the previous 51.1.

The GBP/USD pair is trading not far away from its yearly low of 1.2661 set last August, with gains above 1.2800 being limited below 1.2880, the 61.8% retracement of the 2016/18 rally, indicating a long-term dominant bearish trend. Also, the pair is developing below a daily descendant trend line coming from November high at 1.3174, coming at around 1.2830/40 this Monday. Technical readings in the daily chart maintain the risk skewed to the downside, as the pair is developing far below moving averages, while the RSI indicator resumed its decline, now gaining downward traction at around 42. In the 4 hours chart, the 20 SMA heads mildly lower around 1.2770, providing an immediate short-term resistance, while technical indicators head lower within negative levels. The risk of a downward extension will increase on a break below 1.2724, November 27th daily low.

Support levels: 1.2725 1.2690 1.2665

Resistance levels: 1.2770 1.2805 1.2840

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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