GBP/USD analysis: struggling with major long-term support on no-deal Brexit fears

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2875

EU's Barnier words rejecting Chequers plan weighed on the Pound.
UK Manufacturing sector gave signs of slowing down, PMI at over two-year low.

The Sterling Pound gapped lower at the weekly opening and retained the sour tone across all sessions, falling against the greenback to 1.2854 and settling around 1.2875. The UK currency was hit by EU's Barnier weekend comments, saying that he "strongly opposes" to the Chequers plan. Adding uncertainty, a UK PM spokesman said that the Chequers proposals are the only credible and negotiable Brexit plan. Hopes that the two economies may reach an agreement before October/November have once again decreased. Another negative factor for the Pound was the Markit Manufacturing PMI which the sector giving further signs of slowing down in August. The index came in at 52.8, down from a revised reading of 53.8 in July, its lowest in over two years. This Tuesday, the UK will release its Construction PMI, foreseen at 54.9 from the previous 55.8, and the BOE's Inflation Report Hearings. Technically, the pair is struggling around the 61.8% retracement of the 2016/2018 rally, unable to recover above it ever since mid-London morning, which increases the risk of another bearish extension for the upcoming sessions. In the 4 hours chart, the pair is trading below its 200 EMA and 20 SMA, while technical indicators consolidate near oversold readings, also leaning the scale toward the downside.

Support levels: 1.2845 1.2800 1.2770

Resistance levels: 1.2910 1.2955 1.3000

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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