GBP/USD analysis: tough EU position on Brexit weighs on Pound

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2425

The UK formally begun the Brexit process through a letter that PM May delivered to the EU, resulting in some wild swings in Pound crosses and with the GBP/USD settling at 1.2425. The two parts are beginning now a two-year process that EU President Donald Tusk expects to start with “key arrangements for an orderly withdrawal.” UK PM May, on the contrary, wants to focus on a comprehensive free-trade deal, something that the EU is not willing to put on the table, at least for now. In fact, a leaked resolution from the European Parliament, revealed that Britain will not be given a new trade deal with the EU within the two-year negotiation process and any transitional deal cannot last longer than three years, while insisting that Britain must pay all its financial liabilities. The tough stance of the EU weighed on the Pound, and the GBP/USD 4 hours chart reflects the latest distrust in Pound as the pair is technically poised to extend its slide, given that it broke below a now bearish 20 SMA, while the Momentum indicator heads south well into negative territory, as the RSI indicator consolidates around 40. The pair has an immediate support at 1.2375 the daily low, followed by a strong static one at 1.2330. Below this last, the bearish momentum will likely accelerate exposing the pair to a steady decline towards the 1.2200 region.

Support levels: 1.2375 1.2330 1.2280

Resistance levels: 1.2445 1.2470 1.2500

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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