GBP/USD analysis: mounting concerns over Brexit outcome weigh on Pound

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3580

Brexit woes and worse-than-expected UK data undermined the Pound.
US employment data, if negative, won't be enough to save Sterling.

The GBP/USD pair reached a fresh 4-month low of 1.3537 as bad news coming from the Brexit front hurt the Pound. Seems there's a new crisis in May's inner cabinet, as pro-Brexit ministers are teaming up with the Conservative party to demand a clean break from the EU’s customs system, against May's will of a customs compromise with the EU. Unable to convince her own team of her ideas, seems hard it will come with a solution that will need the approval of the Parliament and the EU. In the meantime, the Brexit clock keeps ticking, with just five more months to go. Earlier on the day, the UK Markit Services PMI also undermined the Pound, up to 52.8 in April from 51.7 in March, but below market's expectations of 53.5. The pair bounced from the mentioned low, but the recovery has been shallow, maintaining it in the red daily basis, in line with further falls ahead. In the 4 hours chart, a bearish 20 SMA caps the upside, now around 1.3645, while technical indicators recovered from oversold readings and head higher, but the RSI currently at 34, far from indicating renewed demand for the Pound but barely reflecting the latest correction. This Friday is all about Payrolls, yet even if US data disappoints, chances of a Sterling strong recovery remain well limited.

Support levels: 1.3540 1.3500 1.3465

Resistance levels: 1.3610 1.3645 1.3690

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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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