GBP/USD analysis: May's end not far away

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.2664

The 1922 committee will push for changes in party rule to oust PM May.
UK inflation increased by less-than-expected in April, up by 2.1% YoY.

Pound's bearish route extended to levels last seen in January against the greenback, with the GBP/USD pair edging lower for a ninth consecutive day. Political chaos undermined the Sterling as starting early London, news made the rounds about the end of PM May's leadership, amid discontent over the 'new' Brexit deal May would present next Friday. The first round of news pointed to a Cabinet coup, as ministers pushed May to quit. Later in the US afternoon, rumors made the round that Mrs. May could resign before Wednesday ends. The 1922 committee will meet by the end of the day, with several members of its executive pushing for party rule changes to allow an immediate vote of confidence in Mrs. May that could force her departure. Adding pressure on Sterling, UK April's inflation increased by less than expected, up by 0.6% MoM and by 2.1% YoY. The UK won't be releasing relevant data this Thursday, although Pound traders will have more than enough with Brexit-related headlines.

The GBP/USD pair is extremely oversold in the daily chart, which means that the risk of an upward corrective movement has increased, even though there're no technical signs that the decline is over. Nevertheless, the Brexit chaos will likely keep it under pressure. The short term picture for the pair remains bearish, as, in the 4 hours chart, it settled below a bearish 20 SMA, while technical indicators lack directional strength well into negative ground, with the RSI consolidating near oversold levels.

Support levels: 1.2660 1.2625 1.2580

Resistance levels: 1.2705 1.2750 1.2790

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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