GBP/USD analysis: no-deal Brexit keeps weighing on the Pound

GBP/USD Current price: 1.2933

• BOE's McCafferty reaffirms Carney's rule of thumb of small rate hikes for the next couple of years.
• GBP/USD at risk of extending its slump to fresh yearly lows.

The GBP/USD pair closed the day little changed at around 1.2930, as despite broad dollar's weakness the Pound was undermined by Brexit-related concerns. Additionally, the UK  like-for-like sales grew by just 0.5% in July according to the  British Retail Consortium missing expectations of a 1.5% advance and also below the previous 1.1%, reflecting the underlying weakness in consumer spending. Later in the day, BOE's policymaker Ian McCafferty repeated what the central bank stated last week, re-asserting that a reasonable rule of thumb would be to expect a couple of small rate hikes in the next two years, adding that a no-deal  Brexit will likely cause economic disruption in the short-term. The kingdom also released the Halifax House Price index, up 1.4% MoM and 3.3% YoY. Another minor housing figure will be out this Wednesday, nothing enough to disturb the negative sentiment toward the Pound. The short-term picture continues favoring the downside, as the pair remained near its yearly low, while an intraday advance stalled at 1.2972, well below the 1.3000 figure. In the 4 hours chart, technical readings favor a new leg lower, as the 20 SMA maintains a strong downward slope above the current level, while technical indicators resumed their declines after correcting extreme oversold conditions. The main support continues being the 1.2920 level, the low set this week, with a downward acceleration expected on a break below it.

Support levels: 1.2920 1.2885 1.2840                                                                                       

Resistance levels: 1.2965 1.3000 1.3045  

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