GBP/USD Analysis: Brexit uncertainty hurt the Pound

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.2564

Chances that a Brexit deal could be reached before the EU Summit decreased.
UK employment sector seen retaining its healthy stance in the three months to August.
GBP/USD retreated, but the short-term picture indicates that bulls retain the lead.

The GBP/USD pair is finishing the day lower at around 1.2560, having fallen to a daily low of 1.2515. Brexit-related headlines kept weighing on Sterling, following weekend comments from UK PM Johnson, who stated that there’s still a long way to go in regards of a deal with the EU. This Monday reports suggested that EU representatives fear that Johnson won’t be able to pass Brexit in Parliament, while Ireland’s Foreign Minister Simon Coveney said that, while a deal is possible, though issues remain. Talks were making slow progress, according to politicians from both sides. Meanwhile, the queen offered a speech to Parliament, in which she stated that the government’s priority is to secure the UK’s departure from the EU on October 31^st.

The UK will release this Tuesday its latest employment data. The ILO Unemployment Rate is seen stable at 3.8%, while the September Claimant Count Change is expected at 27.9K vs the previous 28.2K. Average hourly earnings are seen ticking modestly lower, although within healthy levels.

GBP/USD short-term technical outlook

The GBP/USD pair is down roughly 150 pips from the high set last week at 1.2706, retaining the positive stance in the 4 hours chart, as the pair continues developing above all of its moving averages, with the 20 SMA heading firmly higher above the larger ones. Technical indicators barely retreated from extreme overbought levels before turning flat, indicating limited selling interest. Nevertheless, the decline could continue on the back of more discouraging Brexit-related news.

Support levels: 1.2515 1.2480 1.2440

Resistance levels: 1.2600 1.2630 1.2675

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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