GBP/USD Analysis: speculation about possible UK elections hit the Pound

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.2452

UK PM Johnson mentioned a new Brexit deal, EU’s Juncker said no.
UK CBI Distributive Trades Survey -Realized, resulted at -16% against the -10.0% expected.
GBP/USD bearish and at risk of breaking through July’s monthly low.

The GBP/USD pair has failed yet again to extend gains beyond the 1.2500 figure, ending the day in the red around 1.2450. The Sterling didn’t react to negative UK data, holding on to gains after the release of the CBI Distributive Trades Survey -Realized, which resulted at -16% against the 10.0% drop expected. The Pound, however, gave up in the American afternoon, in part due to broad dollar’s strength as a result of robust local data, and partially due to mounting speculation about a possible election in the UK. UK PM Johnson added more Brexiteers to his cabinet, and in a prepared statement, said that the UK is better prepared for a no-deal outcome than many believe, although adding that he doesn’t expect such outcome. Nevertheless, he also called for a new Brexit deal, with EU’s Juncker quickly responding that the Withdrawal Agreement is the only possible agreement. That, alongside strong opposition in the Parliament, will make it tough for Johnson to come up with a solution. There are no data scheduled in the UK this Friday.

GBP/USD short-term technical outlook

The GBP/USD pair is trading at daily lows heading into the Asian opening, and the 4 hours chart shows that strong selling interest aligned around a bearish 100 SMA rejected bulls for a second consecutive day. Additionally, the pair has fallen below its 20 SMA, while technical indicators turned sharply lower, the RSI currently at around 43, and the Momentum piercing its mid-line. The weekly low was established at 1.2417, now the immediate support. If the pair is pushed below this last, the pair has room to extend its decline beyond 1.2381, this month low.

Support levels: 1.2415 1.2375 1.2330

Resistance levels: 1.2460 1.2505 1.2550

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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