GBP/USD analysis: Brexit-related fears to keep weighing on the Pound

GBP/USD Current price: 1.2770

  • Brexit uncertainty, the main reason for lackluster economic growth.
  • UK employment data to be out this week but no fireworks expected there.

The GBP/USD pair fell to 1.2722, its lowest since June 2017, as the Pound remained undermined by Brexit-related fears, unable to attract investors after a batch of mostly positive data. According to the official releases, the UK preliminary Q2 GDP expanded as expected 0.4% QoQ, matching the market's forecast, and better than the previous 0.2%. Additionally, the June Total Trade Balance deficit shrunk to £-1.861B from a previous £-3.141B. In the same month, Industrial Production expanded 0.4% in and Manufacturing Production also rose 0.4%. UK Finance Minister Hammond attributed the lackluster economic expansion to uncertainty over Brexit but added that chances are that a Brexit trade deal will be achieved. The UK will release this Tuesday fresh employment figures, with the ILO unemployment rate seen steady at 4.2% and wages' growth in line with the recent modest advances. The pair fell for a third consecutive week and for nine days in-a-row, although there are no signs that indicate downward exhaustion, given that in the daily chart, technical indicators maintain their strong downward slopes, with the RSI currently at 23. The 20 DMA is over 200 pips above the current level, bearish, losing relevance for intraday trading. In the 4 hours chart, the pair also presents a bearish stance, with the 20 SMA heading south around 1.2865, the Momentum indicator consolidating in negative territory after a modest upward correction, and the RSI indicator hovering around 24. The mentioned level is a potential target in the case of a due correction.

Support levels: 1.2720 1.2680 1.2645                                                                                       

Resistance levels: 1.2795 1.2830 1.2865  

View Live Chart for the GBP/USD

 

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