• GBP/USD witnessed some intraday selling on Friday amid growing fears of a no-deal Brexit.
  • Dovish comments by BoE’s Saunders further contributed to the sterling’s intraday downfall.
  • Persistent Brexit-related uncertainties might have already shifted the bias in favour of bears.

The GBP/USD pair failed to capitalize on its intraday positive move to levels beyond the 1.3300 mark and witnessed a sharp turnaround on Friday. Renewed concerns about a no-deal Brexit kept a lid on the early uptick, instead prompted some fresh selling at higher levels. Adding to this, dovish comments by the BoE MPC member Michael Saunders took its toll on the British pound. Saunders said that the UK central bank will probably add to their already unprecedented emergency support measures in the coming months to achieve a sustained return of inflation.

This coupled with a modest pickup in the US dollar demand further contributed to the pair's downfall of over 140 pips. The greenback was well supported by a strong pickup in the US Treasury bond yields and retained its bid tone following the release of the US monthly jobs report, which showed that the unemployment rate dropped more than anticipated to 8.4% in August from 10.2% previous. Additional details revealed that the US economy added 1.371 million jobs in August as compared to 1.4 million anticipated and the previous month's 1.734 million.

However, doubts over the sustainability of the US economic recovery held the USD bulls from placing any aggressive bets. This, in turn, assisted the pair to attract some dip-buying and recover around 100 pips from the daily swing lows, near the 1.3175 region. The attempted recovery move lacked any strong follow-through and the pair met with some fresh supply on the first day of the new trading week amid increasing risks of a no-deal Brexit. UK Brexit negotiator David Frost said on Sunday Britain was not scared of a no-deal exit at the end of the year.

Separately, the Telegraph reported that UK Prime Minister Boris Johnson has set a deadline of October 15 to strike a free-trade deal with the European Union. The report further added that if there is no breakthrough in the Brexit deal by then, Britain will accept no deal and move on. Despite the negative developments, the pair, so far, has managed to hold just above the 1.3200 mark. Given that the US markets are closed in observance of Labor Day, the incoming Brexit-related will play a key role in influencing the GBP price dynamics and produce some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, the near-term bias might have already shifted back in favour of bearish traders. A subsequent slide below Friday's swing low, around the 1.3165 region, will reaffirm the negative bias and turn the pair vulnerable to break below the 1.3100 round-figure mark. The momentum could further get extended towards 1.3050-40 strong horizontal support.

On the flip side, the 1.3265-75 horizontal zone again becomes immediate strong resistance and is followed by the 1.3300 mark. Only a sustained move beyond the mentioned barriers will negate the bearish outlook and lift the pair back towards the 1.3400 mark. Some follow-through buying should assist bulls to make a fresh attempt to reclaim the key 1.3500 psychological mark.

fxsoriginal

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD recovers above 1.0400, looks to post weekly gains

EUR/USD recovers above 1.0400, looks to post weekly gains

EUR/USD regained its traction after dropping toward 1.0350 in the early American session and climbed above 1.0400. Trading conditions remain thin on Black Friday and the pair remains on track to end the week in positive territory.

EUR/USD News

GBP/USD recovers toward 1.2100 as US Dollar loses strength

GBP/USD recovers toward 1.2100 as US Dollar loses strength

GBP/USD managed to stage a recovery toward 1.2100 in the American session on Friday and now looks to register gains for the third straight week. The US Dollar struggles to preserve its strength as markets remain subdued on Black Friday. 

GBPUSD News

Gold steadies near $1,750 as US yields retreat

Gold steadies near $1,750 as US yields retreat

Gold price continues to move sideways at around $1,750 heading into the weekend. The benchmark 10-year US Treasury bond yield retreated from the daily high it touched above 3.75% earlier in the day, allowing XAU/USD to erase a portion of its daily losses.

Gold News

Bitcoin: Assessing chances of one last bear market rally for 2022

Bitcoin: Assessing chances of one last bear market rally for 2022

Bitcoin price is in a good place to trigger another bear market rally from a high-time frame perspective. This development, combined with the optimistic outlook seen in on-chain metrics, further strengthens the possibility of a happy ending to 2022.

Read more

FX next week and yield curve inversions

FX next week and yield curve inversions

Since the Fed's last raise November 3, Fed Funds rate opens and closes at 3.83. The Fed Funds rate once traded freely on its own with highs and lows as any financial instrument. In 2000, Central banks implemented meetings every 6 weeks.

Read more

Majors

Cryptocurrencies

Signatures