GBP/USD analysis: PM May get's unexpected support from Boris Johnson

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2980

Pound fell sharply as risk aversion exacerbated the already weakened currency.
UK Markit Services PMI foreseen at 53.9 in September from the previous 54.3.

The GBP/USD pair collapsed after breaking the key 1.30 threshold, trading this Tuesday as low as 1.2940 before the downward pressure receded. The Sterling was dragged lower by plummeting equities in the region amid escalating political tensions between Italy and Brussels. Meanwhile, in the UK Brexit-related headlines kept coming. Former Foreign Minister, Boris Johnson, spoke within the Conservative Party annual conference, and surprisingly, called Tories to back PM May and her Chequers' plan. The headline helped the pair to recover some ground, although it remained unable to regain the 1.30 mark. Later in the day, news hit the wires with Nigel Dodds, the leader of the DUP saying that his party will vote against any Brexit deal involving border checks across the Irish Sea, putting another stone in the path to a smooth Brexit. Later, UK Brexit Secretary Raab said that if the Chequers is off the table from the EU point of view, then lots of what the UK was offering is also off the table for the EU. The Brexit drama is nowhere near an end. UK PM May will address his fellow party members in the mentioned conference this Wednesday, while the calendar will offer the Markit Services PMI for September, foreseen at 53.9 from the previous 54.3.

The pair heads into Wednesday's Asian opening with a bearish stance according to technical readings in the 4 hours chart, as technical indicators have corrected oversold readings before losing directional strength within negative readings, while the 20 SMA is currently crossing below the 200 EMA, reflecting the strength of sellers. Of course, the pair is little about technical readings and all about Brexit, with the pair's direction depending on which kind of Brexit the market believes it will take place.

Support levels: 1.2970 1.2940 1.2900

Resistance levels: 1.3010 1.3035 1.3065

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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