GBP/USD analysis: Steeper correction below 1.3450

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3495

The GBP/USD pair ended the week lower at 1.3495, with the Pound hit late Friday by news indicating that Moody's Investors Service, has downgraded the United Kingdom's long-term issuer rating to Aa2 from Aa1 and changed the outlook to stable from negative. The decision was taken as Moody's considered a significantly weaker outlook for UK's public finances, and that fiscal pressures will be exacerbated by the erosion of the UK's medium-term economic strength that is likely to result from the Brexit. Aiming to revive Brexit negotiations, UK PM May offered a speech in Florence last Friday, proposing a two-year transitional period after leaving the EU in March 2019, offering to continue to pay into the EU, and proposing for trade to continue on its current terms. EU's chief negotiator Barnier referred to the speech a constructive, cheering UK's "willingness to move forward." Having rallied for nearly a month and after achieving a fresh 2017 tops at 1.3653, the GBP/USD pair seems now poised to correct lower, given that in the daily chart, technical indicators have begun correcting overbought conditions, although the pair bottomed for the week at 1.3449, the 23.6% retracement of its latest bullish run, the level to break to confirm additional declines ahead. In the 4 hours chart, the price settled below a horizontal 20 SMA, but technical have entered bearish territory with nice downward slopes, supporting the case for a downward move in the case of an extension below the mentioned Fibonacci support.

Support levels: 1.3450 1.3410 1.3370

Resistance levels: 1.3535 1.3560 1.3600

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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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