GBP/USD Forecast: Entering oversold territory after tumbling on no-deal Brexit fears

The European Union Council Summit is in play in Brussels. Entering the gathering, UK PM Theresa May repeated her stance to ask for a short Brexit delay in order to pass the Brexit deal.

However, European leaders say that without an approved accord, there is no rush to approve an extension.

However, time is running out, with eight days until Brexit. Decisions may be taken at the last moment.

Some political analysts say that May may opt for a no-deal Brexit. Fears have brought together labor union TUC with the business lobby CBI. They sent a rare joint letter to May, urging her to refrain from a no-deal Brexit and asked for a meeting with her.

A petition calling the government to revoke Article 50 surpassed one million votes.

However, fears of a no-deal are in play. This is the worst case scenario amid our three options.

Together with a recovery of the US Dollar, GBP/USD tumbled down to 1.3070, the lowest in a week.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) on the four-hour chart dropped below 30, indicating oversold conditions. This implies a correction is on the cards.

However, cable dipped below the 200 Simple Moving Average and downside Momentum intensified. 

The next support line is only at 1.3010 which was a swing low last week. 1.2960 is a significant support line. It was a double bottom. Further down, 1.2920 and 1.2850 are eyed.

1.3120 turns into resistance. It provided temporary support early in the day. 1.3180 was a swing low early in the week and 1.3250 was a swing high on Wednesday.