GBP/USD analysis: contradictory Brexit headlines trigger wild Pound volatility

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2905

Brexit headlines kept coming, but at this point, seems nobody wants a hard departure.
Germany didn't change its Brexit stance, fully trust on Barnier's decisions.

Volatility around the GBP/USD pair was huge amid contradictory Brexit headlines. The pair fell to 1.2784 at the beginning of the day as risk aversion dominated the financial boards, with the Pound recovering on a positive surprise coming from the UK Markit Services PMI, which resulted in August at 54.3, beating expectations of 53.9 and above the previous 53.5. The pair soared to 1.2982 on news indicating that the UK and Germany would ease Brexit demands to facilitate an agreement, with details about trade to be discussed in the future. However, Reuters later reported that a spokesman for the German government said that the position of Berlin has not changed on Brexit and that Germany has the full trust in Chief European Union Negotiator Michel Barnier. The news sent the pair over 100 pips lower, although a key Fibonacci support contained the decline, as it managed to hold above the 61.8% retracement of the 2016/18 rally. Uncertainty about Brexit remains high, but at this point, seems nobody wants a hard departure. There is no relevant data scheduled in the UK for this Thursday. The 4 hours chart shows that the pair failed to sustain gains beyond its 200 EMA, but trades above a bearish 20 SMA that converges with the mentioned Fibonacci support. Technical indicators in the mentioned chart entered positive ground but lost upward strength, indicating decreasing buying interest. The risk toward the downside will increase on a clear break below the mentioned 1.2890 support.

Support levels: 1.2890 1.2845 1.2800

Resistance levels: 1.2930 1.2980 1.3010

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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