GBP/USD analysis: fresh yearly lows on USD strength

GBP/USD Current price: 1.2845

  • Brexit-related headlines gave a brief respite to Pound as the EU would be willing to make concessions.
  • UK preliminary Q2 GDP, fresh industrial production data to seal Pound's destiny Friday.

Headlines indicating that the EU would willing to make concessions to the UK on Brexit deal gave the Pound a boost mid-European morning, although a deeper analysis of the news was sort of disappointing, as chances of the proposed scenario taking place are close to null. The GBP/USD pair surged to 1.2911 in the heat of the release, retreating to settle around 1.2860, from where the pair resumed its decline to fresh yearly lows on broad dollar's strength. According to reports, the EU is willing to allow Britain to remain in the single market for goods, not services or free movement of people, something that chief negotiator Barnier ruled out a couple of months ago. However, that will mean close tights with the EU, something the UK Parliament will hardly approve. The UK is scheduled to provide multiple relevant updates of its economic situation this Friday, with the most relevant one being preliminary Q2 GDP. Estimates point to a 0.4% growth in the three months to June, and by 1.3% YoY. Also out will be Industrial and Manufacturing production figures for June, and the newly included monthly GDP estimated for June. Should the data disappoint and considering the Pound is out of market favor, lower lows for the year should be expected. The downward trend is firmly in place according to intraday technical readings, as in the 4 hours chart, it continues developing below a bearish 20 SMA, while technical indicators resumed their declines, with the Momentum nearing weekly lows and the RSI at 27, with no signs of changing course.

Support levels: 1.2810 1.2770 1.2730                                                                                       

Resistance levels: 1.2875 1.2920 1.2960  

View Live Chart for the GBP/USD

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