GBP/USD analysis: Brexit keeping Pound extremely volatile

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2719

UK Parliament voting against the government on Brexit issues.
PM May insisted that her deal is the only possible deal.

The GBP/USD pair extended its yearly decline by some pips, hitting 1.2657 after an early run to 1.2839. Early London, the ECJ General Advocate published an opinion in which he said that the UK could unilaterally revoke Brexit, spurring demand for Sterling, later reversed by dollar's strength and a statement from May's spokesman, saying that the government is not planning to cancel Brexit. The pair turned extremely volatile in the US afternoon on the back of UK Parliament-related headlines. UK's MPs voted the government in contempt over Brexit legal advice, ordering the government to publish it immediately, triggering Pound's decline. The pair bounced back to settle above the 1.2700 figure, after another headline indicating that MPs voted to give the Parliament more power over the next Brexit steps, somehow suggesting a hard-Brexit will be avoided. Speaking before lawmakers, PM May repeated that there won't be a renegotiation of the Brexit deal.

The pair has been extremely volatile, but nothing changed the negative tone, as the early advance was contained by selling interest around the daily descendant trend line coming from 1.3174, November monthly high. In the shorter term, and according to the 4 hours chart, the pair is now developing below a mild-bearish 20 SMA, while technical indicators remain within negative ground, lacking directional strength at the time being, a result of the latest 70 pips' bounce. Another attempt to break below 1.2660 may result in a test of the 1.2588 level, June 2017 monthly low.

Support levels: 1.2690 1.2660 1.2620

Resistance levels: 1.2760 1.2800 1.2840

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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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